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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Minerals Council of Australia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- The University of Queensland
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Indogreen Group - Indonesia
- Sree Jayajothi Cements Limited - India
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
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