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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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Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due ...
Thursday, 21 January 21
CHINA'S SPOT THERMAL COAL PRICES REFRESH RECORD HIGH - MYSTEEL
Despite the moderate rebound in temperatures across most regions of China after late December’s deep-freeze, thermal coal prices in the count ...
Wednesday, 20 January 21
CORONAVIRUS OUTBREAK IN HEBEI HAS LIMITED IMPACT ON CHINA'S STEEL INDUSTRY - FITCH RATINGS
The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China’s steel industry, Fitch Ratings says.
...
Wednesday, 20 January 21
MARKET INSIGHT - INTERMODAL
While 2020 is finally behind us, its negative impacts are still hovering over the shipping market. That being said, it is still too early to even s ...
Saturday, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
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- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- PTC India Limited - India
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Central Java Power - Indonesia
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
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