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Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
 Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up we usually observe demolition activity declining and vice versa, while the level of scrapping eventually contributes to a new market equilibrium.
In order for demolition activity to be impacted in either direction, market expectations for the medium term have to be aligned with actual freight market conditions and thus demolition activity reacts with some time lag to the current freight market environment. The decision to sell a vessel for scrap is not only driven by the state of the market cycle and expectations, but to a great extent by the offered scrap price at the time vs the price fetched at the 2nd hand market.
As we stand, owners of vintage tonnage are obviously trying to exploit the current sound performance across all Dry Bulk & Container segments and prefer to keep their vessels for further trading rather than turning to beach yards. Despite positive market conditions in these two segments, possible demolition candidates could be those old units that have to be docked for surveys and their Owners are not in favor of bearing this cost, or the parties that are looking for a fleet renewal. Still, in order to make the demolition decision tempting for them, scrap prices should rise further. Already, scrap prices have risen more than 10% since the beginning of the year, and are up more than 29% compared to last year.
So far during Q1 2021, the freight market and expectations in the Dry Bulk & containers segment have been extremely optimistic, whilst the wet market is still to recover from the severe downturn experienced as a result of oil supply cuts and soft demand amid the ongoing COVID-19 pandemic. YTD dry bulk scrapping rate in dwt terms is estimated -21% below the same period last year, while tankers scrapping is estimated +91.1% y-o-y.
However, taking a closer look at the tankers sold for scrap, we would expect that the current market conditions (with VLCC rates suppressed since the beginning of the year and recently turning negative) would favor the larger crude carriers towards scrap yards. Instead, since the beginning of the year, about 11 vessels were confirmed to be scrapped with half of them being Handysize or MR tankers, while the rest consist mainly of Aframax, two shuttle tankers and no VLCCs.
We could argue that maybe owners of the larger crude tankers have enough buffer from last year’s stellar earnings amid floating storage economics skyrocketing and thus can sustain adverse market conditions, but also expect that the market will turn a corner should OPEC+ reverses oil supply cuts in the next months. We could also argue that owners prefer to sell their vessels in the 2nd hand market, as the premium they are currently getting over selling them for scrap is quite substantial.
While scrap prices are expected to rise further during the 2H of the year amid increased demand for scrap restocking, it remains to be seen how all of the above factors will impact demolition activity across the different shipping segments, with expectations for tanker scrapping activity increasing nonetheless coming in higher.
By George Kallianiotis,
Valuation Department
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Friday, 27 August 21
THE ECONOMICS OF INDONESIA’S DIESEL POWER PLANT TO GAS CONVERSION PLAN ARE PROBLEMATIC - IEEFA
Deploying new small-scale LNG is an uphill battle for PGN
Indonesian gas is currently in a precarious position, where the government needs to ...
Thursday, 26 August 21
INDIA IMPORTED 17.06 MLN TONNES OF LPG IN 2020; UP 11.5% Y-O-Y
Global LPG trade remained fairly positive in 2020, despite the global economic impact from COVID-19, and surged strongly in the first half of 2021. ...
Thursday, 26 August 21
MARKET INSIGHT - INTERMODAL
24th of August 2021, the Baltic Dry Index reached 4,201, a YTD high and the highest since May 2010.
Cape 5TC daily average @ 51,472
...
Tuesday, 24 August 21
COAL PRICE RALLY TO PRESSURE CHINESE POWER GENCOS’ MARGINS FITCH RATINGS
Fitch Ratings expects the pressure on Chinese power generation companies’ (gencos) profit from the recent coal price surge to weaken their cr ...
Tuesday, 24 August 21
TIGHT POWER SUPPLY IN CHINA AMID STRONG DEMAND, HIGH COAL PRICES - FITCH RATINGS
China experienced tight power supply in 1H21 on stronger than expected power demand as economic activity continued to recover, Fitch Ratings says i ...
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- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
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- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Ministry of Mines - Canada
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Goldman Sachs - Singapore
- Electricity Generating Authority of Thailand
- The University of Queensland
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
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- Latin American Coal - Colombia
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- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
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- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
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- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
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