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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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Friday, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
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- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
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- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
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- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
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