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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, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
Wednesday, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Planning Commission, India
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- White Energy Company Limited
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- The University of Queensland
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
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