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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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Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
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- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
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- Bharathi Cement Corporation - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
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- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- The University of Queensland
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
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