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Tuesday, 01 December 15
TANKERS VERSUS BULKERS - JUST PLAYING CATCH UP? - CLARKSONS
 It’s now more than a year since the tanker market took off. In mid-2014 tanker earnings picked up and since then have been in the $30-$40,000/day range. But the market remains nervous. This tanker pick-up coincided with a slump in dry bulk earnings, which is interesting because on paper bulkers and tankers both seem to have surplus capacity. So why are tankers doing so much better than bulkers?
Long-Term Premium
On an “all sizes average” basis tanker earnings generally exceed bulker earnings (the tanker “basket” contains a greater share of larger ships). For example, between 1990 and 2015 to date tanker earnings averaged $24,996/day, whilst bulkers earned $13,933/day. That gives tankers a 79% premium over bulkers. During the seven years since the Credit Crisis, the premium has remained. Tankers have earned $18,281/day, compared to bulkers’ $12,427/day, a 47% premium. So the “premium” relationship held, even during a period of deep recession.
Earnings Distribution
However, during the period of recession tanker earnings have swung from below to above “average premium levels”. To illustrate this point we have estimated what tanker earnings “should have been” over the last seven years if they had followed the “average premium” relationship with bulker earnings over the full period back to 1990. This relationship was estimated using a regression equation as a “rule of thumb”, using monthly data for the period 1990 to 2015, and then used to estimate tanker earnings since 2009 from bulker earnings, shown by the red line on the graph.
For the first five years tankers underperformed compared to the long-term “average premium” versus bulkers, with the blue line, showing actual earnings, below the red line. But in 2014 they started to exceed the expected premium as bulker earnings dropped and tanker earnings increased. Currently tanker earnings offer a significant “bonus” above the estimated “norm”, at levels about six times higher than bulker earnings.
More Than One Answer
So what’s going on? The first answer is that tankers are playing “catch up” for the bad run early in the recession. But there are other answers to the question. One is that in 2015 oil trade has grown much faster than expected, increasing by 4% compared with only 2% expected earlier in the year. Another is the oil price collapse from over $100/bbl to close to $40/bbl, creating an opportunity for arbitrage by holding oil in ships, in anticipation of a price increase. Additionally, of course, bulkers have suffered from an absence of demand growth this year.
The Usual Suspects?
So there you have it. The tanker boom has gone on longer than many might have anticipated and tanker earnings are outperforming their long-run relationship with bulker earnings. But a “fundamental” surplus remains and investors might be right to be cautious. Scrapping has almost stopped, ordering has picked up and supply growth is set to increase. So, enjoy it while you can, and remember that it’s partly a game of catch up.
Have a nice day.
Source: Clarksons | Hellenic Shipping News
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Thursday, 03 December 15
DRY BULK: THERMAL COAL LOWER USAGE UNDER A POTENTIAL NEW CLIMATE DEAL WILL ADVERSELY IMPACT THE MARKET'S RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In direct contrast to the tanker market, the dry bulk one has seen demand for key commodities, such a coal, dwindling down over the course of the p ...
Thursday, 03 December 15
PANAMAX BUSINESS REMAINED UNDER PRESSURE LAST WEEK
COALspot.com: Following the new record lows the Dry Bulk market witnessed the week prior, the BDI took a much needed breath during the past days.
...
Wednesday, 02 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SLIGHTLY UP FOR THE THIRD STRAIGHT WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up month over month and fell week over week.
The Q1’ 2016 &nbs ...
Wednesday, 02 December 15
MARKET INSIGHT - VASSILIS LOGOTHETIS
Boom and bust cycles in commodity prices are not something rare, yet they have important implications both for the world economy in general and for ...
Tuesday, 01 December 15
FOB NEWCASTLE COAL SWAP UP THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.75 per ton (9.26%) month over month to US$ 36.75 per ton. The swap ...
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- London Commodity Brokers - England
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Australian Coal Association
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
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