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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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Tuesday, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of global ...
Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculati ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
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- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- PTC India Limited - India
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
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