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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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Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
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- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Australian Coal Association
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- PNOC Exploration Corporation - Philippines
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
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