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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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Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
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- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Mercator Lines Limited - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Maheswari Brothers Coal Limited - India
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Coal Association
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Minerals Council of Australia
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
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