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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, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
Wednesday, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
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- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Bharathi Cement Corporation - India
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- The University of Queensland
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Parliament of New Zealand
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
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