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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 $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Friday, 18 March 16
OUTLOOK ON GLOBAL SHIPPING SECTOR TURNS NEGATIVE AS SUPPLY-DEMAND GAP WIDENS AND EBITDA DECLINES - MOODY'S
Moody’s Investors Service (Moody’s) has changed its outlook on the global shipping sector to negative as it expects supply growth to ou ...
Friday, 18 March 16
DRY BULK MARKET HAS LITTLE TO LOOK FORWARD TO FROM CHINA AT THE MOMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market’s rebound is long overdue, but when it comes, it won’t be because of China’s strong demand for commodities, o ...
Friday, 18 March 16
COAL PRODUCTION IN THE UNITED STATES SLIGHTLY DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.5 million shor ...
Thursday, 17 March 16
THE PANAMAX MARKET SEEMS TO BE A BIT TOPPISH THIS WEEK - FEARNLEYS
Cape
There are challenging days with rates or less unchanged from last week; West Australia to China still below US$ 3 pmt, and Tuarao to China i ...
Wednesday, 16 March 16
OIL SUPPLY OUTPACES DEMAND ON ANY GIVEN DAY, AND BILLIONS OF BARRELS OF OIL ARE BEING STORED RATHER THAN CONSUMED - CHRISTOPHER
Oil producers have turned to the concept of limiting their output to January levels as a certain form of action to boost prices that have fallen mo ...
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Showing 2516 to 2520 news of total 6871 |
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- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- White Energy Company Limited
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Australian Coal Association
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- London Commodity Brokers - England
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