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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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Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
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- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- PTC India Limited - India
- MS Steel International - UAE
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
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