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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, 10 June 21
INDONESIA COAL EARNINGS RECOVERY TO SLOW AFTER STRONG 1Q - FITCH RATINGS
Fitch Ratings expects the recovery in operating and financial performance of Indonesian coal miners and coal contractors to slow during rest of 202 ...
Thursday, 10 June 21
U.S. COAL PRODUCTION TO TOTAL 600 MMST IN 2021, 11% MORE THAN IN 2020 - EIA
EIA expects U.S. coal production to total 600 million short tons (MMst) in 2021, which is 61 MMst (11%) more than in 2020.
The increase is dri ...
Wednesday, 09 June 21
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
The In-Person Maritime Event
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
culminates successfully in Dubai
Press Release: ...
Wednesday, 09 June 21
MARKET INSIGHT - INTERMODAL
“Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquir ...
Saturday, 05 June 21
KOMIPO INVITED 5600 NAR COAL OFFERS FOR THREE YEARS SUPPLY; 520,000 MT PER YEAR
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
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- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Planning Commission, India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
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