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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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Monday, 23 August 21
CHINESE COAL PRODUCTION RISES 4.9 PCT IN 1ST 7 MONTHS OF 2021 - NBS
Official figures demonstrated that the Chinese raw coal production surged 4.9 percent annually to 2.26 billion tonnes in the January-July period of ...
Friday, 20 August 21
ARE WE LOOKING AT THE NEXT DRY BULK SUPER CYCLE? IS IT EVEN A CYCLE? - BIMCO
Throughout the first half of the year, talk of a new dry bulk super cycle has been on many lips as commodity prices have soared to multi-year highs ...
Friday, 20 August 21
BIMCO'S SHIPPING NUMBER OF THE WEEK: CHINESE IRON ORE IMPORTS FALL TO 14-MONTH LOW IN JULY - PETER SAND
Chinese iron ore imports fell to 88.5 million tonnes in July, the lowest level since May 2020. The fall in July means that accumulated imports are ...
Friday, 20 August 21
SOARING DEMAND FOR THE WORLD’S LEAST-LIKED COMMODITY SEES THERMAL COAL PRICES JUMP 106% THIS YEAR - CNBC
Soaring electricity demand, infrastructure woes and a surge in global gas prices have triggered an extraordinary rally for the world’s least ...
Friday, 20 August 21
CHINA’S IRON ORE IMPORTS CONTRACTED YEAR-ON-YEAR BY 2% IN 2018 AND GREW YEAR-ON-YEAR BY ONLY 1% IN 2019 - COMMODORE RESEARCH
Examining the last ten years of China’s crude steel output and iron ore imports shows that China’s iron ore imports have stayed r ...
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- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
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- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
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- Mercator Lines Limited - India
- Australian Coal Association
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- Ministry of Transport, Egypt
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- Indian Oil Corporation Limited
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- Indian Energy Exchange, India
- New Zealand Coal & Carbon
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- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
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- Trasteel International SA, Italy
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- Larsen & Toubro Limited - India
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- London Commodity Brokers - England
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- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Latin American Coal - Colombia
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- Ministry of Finance - Indonesia
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- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
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- The Treasury - Australian Government
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- McConnell Dowell - Australia
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- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- PTC India Limited - India
- MS Steel International - UAE
- Wilmar Investment Holdings
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
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