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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, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Deloitte Consulting - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- London Commodity Brokers - England
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
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