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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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Sunday, 11 July 21
COAL SHOWS ITS STAYING POWER AS ECONOMIES BOUNCE BACK - THE WALL STREET JOURNAL
Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to ...
Sunday, 11 July 21
ROBUST CHINA COAL DEMAND AMID AUSTRALIA IMPORT BAN FUELS PRICE RALLY - REUTERS
Seaborne coal has become a quiet winner among energy commodities, lacking the attention of higher-profile crude oil and liquefied natural gas (LNG) ...
Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline ...
Friday, 09 July 21
EIA FORECASTS COAL’S GENERATION SHARE IN U.S TO RISE FROM 20% IN 2020 TO 24% THIS YEAR BUT TO FALL TO 22% NEXT YEAR
The July Short-Term Energy Outlook (STEO) of EIA remains subject to heightened levels of uncertainty related to the ongoing economic recovery from ...
Friday, 09 July 21
KOREA SOUTH-EAST POWER CO., LTD. INVITES BIDS FOR 1.86 MILLION TONS OF COAL OF 5600 & 4000 NCV COAL FOR THREE YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 280,000 – 300,000 MT of Min. ...
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- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- White Energy Company Limited
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
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