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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, 09 July 21
CAN WE EXPECT AFFORDABLE POWER SUPPLY BY REPLACING COAL BASED POWER WITH LNG? - FINANCIAL EXPRESS
Bangladesh government’s recent decision to cancel the contracts for 10 coal fired power plants in late June 2021 has invited interest in the ...
Thursday, 08 July 21
STRONGEST HALF YEAR FOR SHIPPING MARKETS SINCE 2008 - CLARKSONS
A year on from peak trade disruption, we update our half year report for the shipping industry profiling a strong recovery and some exceptional ind ...
Tuesday, 06 July 21
INDONESIA COAL PRICE REFERENCE RISES TO 112 MONTHS HIGH IN JULY 2021; 121.15% HIGHER COMPARED TO THAT IN JULY 2020 PRICE
COALspot.com: The Indonesia coal price reference for July 2021 fixed at US$ 115.35 per ton FOB vessel.
The Indonesia coal price referenc ...
Tuesday, 06 July 21
INDONESIAN COAL EXPORTS FELL BY 37% YOY IN 1Q21 DUE TO ADVERSE WEATHER CONDITIONS - FITCH RATINGS
Chinese coal imports declined by 25% yoy in 5M21as a result of both restrictions on Australian coal and the high base in 2020. Import volume in Jan ...
Tuesday, 06 July 21
INDONESIAN 4,200 INDEX HAS ALSO INCREASED TO OVER USD50 PER TONNE SINCE MAY THIS YEAR REFLECTING STRONG CHINESE IMPORT DEMAND - FITCH RATINGS
Price Surge Since March
APAC thermal coal has resumed its price surge since March this year. The benchmark Newcastle 6,000kcal/kg grade c ...
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- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
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