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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, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
Wednesday, 10 February 16
OWNERS APPEAR WILLING TO DISPOSE OF TONNAGE THE SOONEST IT HITS THE 10 YEAR MARK - TIMOS PAPADIMITRIOU
COALspot.com: The last two months of 2015 made a case for traditional shipowners to invest in the dry bulk sector, doing so though based purely on ...
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- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
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