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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.
The Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Wednesday, 10 February 21
MARKET INSIGHT - INTERMODAL
We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of ...
Tuesday, 09 February 21
SWITCHING COAL PLANTS TO PLN'S BIOMASS COFIRING PLAN IS NO MAGIC BULLET - IEEFA
Implementation risks for Indonesia PLN's switch from coal to biomass cofiring
PLN’s biomass cofiring plan will require not ...
Friday, 05 February 21
THE INDONESIA COAL PRICE REFERENCE FOR FEBRUARY 2021 SETTLES AT US$ 87.79 PER TON FOB VESSEL
COALspot.com: The Indonesia coal price reference for February 2021 settles at US$ 87.79 per ton FOB vessel. The February reference price is the hig ...
Thursday, 04 February 21
WHY BANGLADESH SHOULDN’T COUNT ON A FOSSIL FUEL FUTURE - IEEFA
Around US$50 billion of LNG projects in Asia at risk of cancellation
Two astonishing figures have circulated in the Asian energy sector in the ...
Wednesday, 03 February 21
INDONESIA TO EXPORT 395 MILLION TONS OF COAL IN 2021 - ESDM
Data from the Ministry of Energy and Mineral Resources shows that, Indonesia is planning to produce 550 million Ton of coal in 2021 and as of t ...
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- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- The University of Queensland
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- GVK Power & Infra Limited - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
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