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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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Saturday, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
Wednesday, 24 February 21
MARKET INSIGHT - INTERMODAL
With yields of up to 563%, the shares of Greek shipping companies listed on Wall Street are recorded. The Coronavirus pandemic has not significantl ...
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- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- GMR Energy Limited - India
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
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