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Wednesday, 09 June 21
MARKET INSIGHT - INTERMODAL
 “Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquired asset exposes the buyer less. This has always been the essence of investing in most industries. Of course, like everything else, it’s is easier said than done when a market is going through a trough. Apart from the purchase cost, you still have to spend money in order to subsidize the asset until the market recovers. And of course, there is always the question of whether the market has reached a bottom or not. Anyway, all of these are known.
So now that we are experiencing a bullish dry bulk market and a phenomenal container market, it might be logical to speculate that tankers are not far behind on their way to recovery. With that said, investing in tankers is the only counter cyclical move you could do today at least within the 3 vanilla sectors.
Currently, the tanker market continues to remain weak on the back of constrained oil supply from OPEC+, but last year’s record high crude oil inventories have drawn down extensively, currently are at the bottom of the 5 year average range. At the same time, oil demand is set to recover signaling that the tanker trough might be hopefully ending. Goldman Sachs projects oil demand to increase by +5.0 million barrels per day over the next 6 months, with this summer particularly likely to witness the biggest ever oil demand increase. Additional oil supplies will need to flow into the market; OPEC+ has already decided to gradually increase production through July. A favorable scenario would dictate a further increase in OPEC+ supply by Q4, even if Iranian barrels return to the market, in order to cope with the demand.
But up to this date, despite a lackluster tanker freight market, asset values have increased as underlying steel prices have reached record high levels providing support. The increase in tanker asset values has been more pronounced for younger units, where the majority of SnP interest lies, rather than older ones.
Since January, approximately 124 tankers have changed hands, with the majority being AFRAs (58), followed by VLCCs (41) and SUEZMAXs (25). It makes sense for shipowners to look into buying second hand crude ships purely out of speculation as a tanker recovery is well overdue. The majority of the ships sold were in the 13-17 years age bracket, mostly due to high supply of candidates (e.g. approx. 38% of the Aframax fleet is above 15Y Old). It is certain that a lot of buyers bidding on 12-13 year ships would also go after 10Y or 8Y old tonnage if there was availability.
Recently, we have seen an increase in interest for ships built in after 2010 and almost no interest for older ships with the asset value gains shaped accordingly. Indicatively, 10Y old Aframax values are estimated to have increased by +27.0% since Q4 2020, while 15Y old values have only gained +14.0% over the same period. It might make sense to assume that since the anticipated recovery is yet to be seen, buyers are not willing to risk it on older ships. But given what we are currently witnessing on the dry and box sectors is this wise?
We see 10-15 year old container ships that a year ago might have being sold at demolition levels now being fixed for 4-5 years in the low 40k for further trading. We are witnessing the so called obsolete 28k handy fetching above 20k p/d. Although the tanker regulatory environment, makes older crude tankers less competitive in traditional trades where oil majors are involved even in a tanker recovery, the 15Y Old to 5Y old ratio at this point being at approx. 40% (the lowest we have seen is 30% during 2013 and the highest 60% during 2009) might be enticing enough to invest into an older asset and take advantage of a broader tanker market recovery in the near future. In other words, even older units can benefit in a market recovery.
As in the famous quote “A rising tide lifts all boats.”
By Timos Papadimitriou,
SnP Broker
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 14 April 21
MARKET INSIGHT - INTERMODAL
After a series of months where the dry bulk sector was attracting most of the buying interest, tankers SnP activity spiked in the previous weeks. O ...
Tuesday, 13 April 21
INDONESIAN COAL PRICE REFERENCE IN APRIL UP AGAIN ON FIRM DEMAND
COALspot.com: The Indonesia coal price reference for April 2021 settles at US$ 86.68 per ton FOB vessel.
The Indonesia coal pr ...
Monday, 12 April 21
CHINA'S ECONOMIC RECOVERY PUSHES COAL MINES TO INCREASE YIELD - GLOBAL TIMES
China’s fast economic rebound from coronavirus has driven up electricity demand, leading to higher consumption of coal which is seeing rising ...
Monday, 12 April 21
GLOBAL COAL PRODUCTION EXPECTED TO RISE BY 3.5% IN 2021, SAYS GLOBALDATA
Global coal output is estimated to have declined by 2% in 2020 due to COVID-19-related lockdowns and restrictions, with significant reductions obse ...
Wednesday, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
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- Mjunction Services Limited - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- VISA Power Limited - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
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