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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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Sunday, 21 February 21
ANZ DIVESTING FROM THE WORLD’S LARGEST COAL EXPORT PORT IS 'PRAGMATISM' - IEEFA
The biggest buyers of Australian thermal coal have committed to net-zero emissions
ANZ, Australia’s third largest bank, has decided to s ...
Sunday, 21 February 21
EDITORIAL: TIME FOR BANGLADESH TO FOCUS ON RENEWABLE ENERGY, NOT COAL - DHAKA TRIBUNE
Shifting away from coal is not only desirable, but absolutely necessary in these times.
In spite of being detrimental to environment ...
Wednesday, 17 February 21
STRANDED ASSETS A LONG-TERM RISK FOR MAJOR FOSSIL FUEL EXPORTERS - FITCH RATINGS
Fossil exporters face a loss of GDP, government revenue and export receipts from the transition to a lower-carbon economy over the coming decades. ...
Friday, 12 February 21
U.S: WIND SURPASSED COAL AS NO. 1 FUEL SOURCE IN 2020 FOR SOUTHWEST POWER POOL - IEEFA
Wind energy growth due to geography, design factors, and new installations
Wind surpassed coal as the primary power generation sourc ...
Wednesday, 10 February 21
FY21 COAL DEMAND MAY BE LOWER THAN PREVIOUSLY ESTIMATED DUE TO COVID-19: PRALHAD JOSHI - PTI
Coal demand in the current fiscal may be lower than the initial estimate of 1,085 million tonnes (MT) due to the impact of COVID-19, Parliament was ...
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- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Australian Coal Association
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Bahari Cakrawala Sebuku - Indonesia
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
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