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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 $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Monday, 08 February 16
DRY-BULK SHIPPING DIVING DEEP
COALspot.com: The freight markets continued to fall this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of glo ...
Monday, 08 February 16
DRY BULK: SHIPBROKER SEES BDI MARKET REACHING LOW POINT OF 236 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The endless pit that is the dry bulk market over the past two months, has been the issue of debate among ship owners, shipbroker and analysts alike ...
Friday, 05 February 16
COAL INDIA EYES COAL MINES IN SOUTH AFRICA - PTI
“Coal India Ltd has plans of acquiring coal mines in South Africa,” an official said. It is looking at acquiring mines in partnership w ...
Friday, 05 February 16
U.S. WEEKLY COAL OUTPUT ROSE 4.2% TO 13.6 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.6 million shor ...
Thursday, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
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- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- PTC India Limited - India
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
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