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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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Tuesday, 23 March 21
LOWER WHOLESALE PRICES PUT PRESSURE ON AUSTRALIAN ENERGY RETAILERS - FITCH RATINGS
Fitch Ratings expects the low wholesale energy prices in the Australian National Energy Market to persist through to 2022, which will affect electr ...
Tuesday, 23 March 21
SCRUBBER-FITTED SHIPS NEARLY DOUBLE AS FUEL SPREAD SETTLES AT $118 PER MT - PETER SAND
As the lion’s share of the world fleet replaced high-sulphur fuel oil (HSFO) with low-sulphur fuel oil (LFSO) as a mean of propulsion to be c ...
Tuesday, 23 March 21
CHINA'S COAL OUTPUT EDGES UP IN FIRST TWO MONTHS - XINHUA
China’s raw coal output rose 25 percent year on year to 620 million tonnes in the first two months of 2021, official data showed.
...
Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up ...
Friday, 12 March 21
INDIA SHOULD FOCUS ON REDUCING COAL POWER GENERATION INSTEAD OF CAPACITY - IEEFA
Nearly half of existing coal power in India is more expensive than new renewable power
To get to its ambitious climate targets, Indi ...
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- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- PTC India Limited - India
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Planning Commission, India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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