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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, 15 January 16
FOB INDONESIA COAL SWAPS FIRM SLIGHTLY LAST WEEK
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month over month and week over week.
According to AsiaClear OTC coal swap's r ...
Friday, 15 January 16
SHIPPING: 2016 STARTED WITH MISERY ACROSS THE BOARD FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As one would have expected, the dry bulk market starter the new year where it left off in 2015, plunging to never seen before depths, as the market ...
Friday, 15 January 16
U.S. WEEKLY COAL PRODUCTION ROSE ACROSS ALL BASINS: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 14 January 16
FOB RICHARDS BAY COAL SWAP FOR Q3 DELIVERY CLOSED $5.90 LOWER THAN Q1 PRICE
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coal ...
Wednesday, 13 January 16
U.S. COAL PRODUCTION DECLINED BY 109 MMST IN 2015; COAL EXPORTS DECREASED 21% Y-O-Y
COALspot.com: U.S. coal production declined by 109 million short tons (MMst) (11%) in 2015, the largest decline ever recorded, says EIA.
The 2 ...
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- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Australian Coal Association
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Planning Commission, India
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Metalloyd Limited - United Kingdom
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
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