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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, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
Wednesday, 17 February 16
TAP ON OPPORTUNITIES IN GROWING ELECTRICITY DEMAND AND NEW COAL POWER PROJECT DEVELOPMENTS IN THE PHILIPPINES - IBC
Tap on Opportunities in Growing Electricity Demand and New Coal Power Project Developments in the Philippines
Coal Power Generation 2016
19- ...
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- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- The University of Queensland
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Australian Coal Association
- Edison Trading Spa - Italy
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
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