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Wednesday, 24 February 16
THIRTEEN - NOT ALWAYS AN UNLUCKY NUMBER? - CLARKSONS
 Back in early 1999 the price of a 5 year old Panamax bulkcarrier dipped to $13.5m, and ever since analysts have hailed purchase decisions made at that time as some of the most lucrative shipping deals ever seen. Today, with the price back at $13m, perhaps it’s a good time to reflect on how successful investors were back in 1999 and whether there are similar opportunities once again.
What Was The Deal?
The graph shows for each year since 1990 the return that would have been generated by the purchase of a 5 year old Panamax bulkcarrier at the start of the year, the subsequent operation for ten years at the prevailing one year timecharter rate and then the sale of the unit at the end of that period as a 15 year old (for units purchased in 2007 and later, disposal at start 2016 was assumed). At the end of 1999 investors could pick up a 5 year old Panamax bulker for $14m. Trading that vessel at the start year one year timecharter rate for 10 years would have generated estimated earnings of $66.5m (after opex), and then as a 15 year old unit in 2009 the vessel could have been sold for $12.5m. That’s a small loss of $1.5m on the asset but still a total return of $65m, and an impressive internal rate of return (IRR) of 26%.
Playing Snap
A few years later, 5 year old Panamax bulkcarrier purchases did perhaps even better. Buying a 5 year old in 2002, once again at $14m, trading at the timecharter rate and selling as a 15 year old would have generated total returns of $73.2m and an IRR of 41%, whilst the equivalent project in 2003 would have generated $66.1m and an IRR of 44%. These vessels would have generated boom earnings earlier in the project period, subject to a heavier weighting in terms of the internal rate of return calculation.
Not Always A Good Hand
However, not all investors are so lucky. In this example, 5 year old ships purchased since 2008 (and sold this year, so admittedly with less time to hit upon a period of boom earnings) generated negative returns, and those purchased pre-1995 an average IRR of 7%. Buyers in 2008 would have lost a whopping $82.1m on the asset. Nevertheless, there was clearly a golden period; in the years 1998-2006 investors would have achieved an IRR ranging between 20% and 44%.
Unlucky (Or Lucky) 13?
So for those who have had the stomach to buy in at difficult times, there have been more than ample rewards. Today the price of a 5 year old Panamax is back at $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Monday, 28 March 16
THE SUPRAMAX INDEX WAS UP TWENTY-FOUR POINTS TO 473 POINTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 25 March 16
DRY BULK SHIPPING FLEET WILL GROW BY 1.3% DURING 2016 - BIMCO | HELLENIC SHIPPING NEWS
The dry bulk market will keep on suffering, at least until the start of 2017 and possibly well after that, should the current balance of supply and ...
Friday, 25 March 16
U.S COAL PRODUCTION DECLINED 9.1% W/W - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.3 million shor ...
Thursday, 24 March 16
PERSISTENT OVERCAPACITY TO PROLONG CHINA'S COAL SECTOR DOWNTURN - FITCH
China's coal sector is likely to remain under pressure in the short to medium term as structural weaknesses in demand and overcapacity persist, ...
Thursday, 24 March 16
SEABORNE TRADE: CHECKING UP ON THE TRENDS - CLARKSON RESEARCH
Following a decline in 2009, seaborne trade grew on average by 4.9% p.a. in 2010-13, reflecting booming import demand in a number of key importing ...
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- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- White Energy Company Limited
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- The University of Queensland
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
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