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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, 07 April 21
MARKET INSIGHT - INTERMODAL
Following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a f ...
Wednesday, 07 April 21
COAL USED TO GENERATE ELECTRIC POWER IN U.S. WILL INCREASE BY 13 PERCENT TO 495 MMST IN 2021 - EIA
EIA expects U.S. coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an addi ...
Wednesday, 31 March 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.12 PCT - XINHUA
China Taiyuan coal transaction price index stood at 139.03 points Monday, up 0.12 percent week on week.
The index, released by China ...
Wednesday, 31 March 21
MARKET INSIGHT - INTERMODAL
Over the past week, the biggest story has been the blockage of the Suez Canal, as a result of the grounding of the container ship Ever Given. At th ...
Monday, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
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- Indogreen Group - Indonesia
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Meenaskhi Energy Private Limited - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Commonwealth Bank - Australia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Deloitte Consulting - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
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