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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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Thursday, 03 March 16
BDI FURTHER STRENGTHENING; THE INCREASE IN RATES WAS NOT SUBSTANTIAL
COALspot.com: The BDI closed off on a positive note for a second week in a row, further strengthening the belief that the market might be bottoming ...
Thursday, 03 March 16
RIO TINTO COMPLETES SALE OF INTEREST IN BENGALLA JOINT VENTURE FOR US$616.7 MILLION
COALspot.com: Rio Tinto has completed the sale of its 40 per cent interest in the Bengalla coal Joint Venture in Australia to New Hope Corporation ...
Wednesday, 02 March 16
RE-EVALUATION OF MINING LICENSES CLEAN AND CLEAR STATUS IN INDONESIA
COALspot.com: In connection with the transfer of mining authority from Regents/Mayors to Governors1 and from Regents/Mayors and Governors to t ...
Wednesday, 02 March 16
OIL MY GOD.....!!!!
OIL my GOD….!!!!
The oil price “crash” that started in 2014 was caused by a glut of practically unwanted oil. Producers had be ...
Tuesday, 01 March 16
CS 42 (4200 GAR) COAL INDEX CLOSED AT US$ 27.11 A TON ON 26 FEBRUARY
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.31 percent week over week to averaging $38.77 per ton on this past Friday, ...
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- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Kideco Jaya Agung - Indonesia
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Parliament of New Zealand
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Commonwealth Bank - Australia
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