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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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Tuesday, 01 June 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.02 PCT - XINHUA
China Taiyuan coal transaction price index stood at 160.06 points Monday, down 0.02 percent week on week.
The index, released by Chi ...
Tuesday, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
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- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Renaissance Capital - South Africa
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Grasim Industreis Ltd - India
- The Treasury - Australian Government
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
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