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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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Wednesday, 03 February 21
MARKET INSIGHT - INTERMODAL
"2020 the year from hell for the entire world, had everything for shipowners. The introduction of the sulphur cap and VLSFO, a Pandemic outbre ...
Tuesday, 02 February 21
WILL THE ELECTRONIC B/L BE FULLY IMPLEMENTED? FIVE POINTS TO CONSIDER - MOL
KNOWLEDGE TO ELEVATE
The trend towards digitization of Bills of Lading (B/L) has begun to attract attention in the trade and shipping industrie ...
Monday, 01 February 21
A 56,000-DWT OPEN MANILA WAS FIXED FOR A TRIP VIA INDONESIA REDELIVERY CHINA AT $11,500 - THE BALTIC BRIEFING
Capesize
The Capesize routes endured a week of slippage on rates, bringing the market back down to levels seen at the beginning of the month. D ...
Monday, 01 February 21
PAKISTAN: COAL DEMAND EXPECTED TO SPIKE IN 2021 - DAWN
Coal demand is expected to remain upbeat in 2021 as more coal-fired and captive power plants are coming up in the current year.
Acco ...
Friday, 29 January 21
COAL EXPORTS FROM AUSTRALIA TO MAINLAND CHINA DECLINED BY -22.2% Y-O-Y IN 2020 - BANCHERO COSTA
In the 12 months of 2020, global seaborne coal trade declined by as much as -12.7% year-on-year, according to vessel tracking data from Refinitiv, ...
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- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Australian Coal Association
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Planning Commission, India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
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