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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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Thursday, 01 July 21
WHY INDIA’S SOLAR POWER TARIFFS ARE CLIMBING AFTER HITTING RECORD LOWS LAST YEAR - IEEFA
What’s behind the recent increase?
Solar tariffs are deflationary. Prices have fallen by 75% in seven years in India, and in 2 ...
Thursday, 01 July 21
END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024
Press Release: The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK& ...
Thursday, 01 July 21
WHY BUILD 600 NEW UNPROFITABLE COAL PLANTS? - DEUTSCHE WELLE
Governments in Asia are planning 600 new coal plants that could lose investors $150 billion and derail efforts to limit temperature rise in line wi ...
Thursday, 01 July 21
FIVE ASIAN COUNTRIES ACCOUNT FOR 80% OF NEW COAL POWER INVESTMENT - THE GUARDIAN
Five Asian countries are jeopardising global climate ambitions by investing in 80% of the world’s planned new coal plants, according to a rep ...
Wednesday, 30 June 21
DELTA DUNIA MAKMUR RECORDED AN IMPROVED REVENUE IN Q1 2021; REVENUE INCREASED BY 49% QOQ TO US$160 MILLION ON THE BACK OF COAL PRICE RECOVERY
PT Delta Dunia Makmur Tbk. (“DOID”) released its consolidated financial and operating results that include its primary and wholly-owned ...
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- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Planning Commission, India
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Merrill Lynch Commodities Europe
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
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