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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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- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- White Energy Company Limited
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Standard Chartered Bank - UAE
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
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