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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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Wednesday, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
Wednesday, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA THREATENS TO REVOKE 2,350 MINING BUSINESS PERMITS
The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
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- Asmin Koalindo Tuhup - Indonesia
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
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- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
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- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
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- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
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- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- The University of Queensland
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
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- London Commodity Brokers - England
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
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- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
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- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
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- Billiton Holdings Pty Ltd - Australia
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- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
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