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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, 29 January 21
OPEC+, COVID-19 AND ENERGY TRANSITION - 3 THEMES IMPACTING OIL MARKETS AND REFINING IN 2021 - WOOD MACKENZIE
Wood Mackenzie’s latest outlook report shows that the art of balancing oil markets and the refining sector in 2021 hinges upon three key them ...
Thursday, 28 January 21
STRONG CHINESE THERMAL COAL IMPORTS TO BENEFIT INDONESIAN MINERS IN THE NEAR TERM - FITCH RATINGS
China's thermal coal imports are likely to remain strong ahead of the Chinese New Year in mid-February on robust demand, high utilisation at do ...
Thursday, 28 January 21
WIND PROPULSION FOR DRY BULK CARRIERS - OLDENDORFF
Oldendorff Carriers (OC) has signed a Joint Development Project (JDP) with Anemoi Marine Technologies (Anemoi), Lloyd’s Register (LR) and Sha ...
Thursday, 28 January 21
BUMA PRICED A USD400 MILLION 7.75% 5-YEAR SENIOR NOTES
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama priced a USD400 million 5-year (non-callable 2-year)& ...
Wednesday, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
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- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Planning Commission, India
- Mjunction Services Limited - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Australian Coal Association
- Sakthi Sugars Limited - India
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Independent Power Producers Association of India
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- MS Steel International - UAE
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
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