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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, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
Wednesday, 07 April 21
MARKET INSIGHT - INTERMODAL
Following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a f ...
Wednesday, 07 April 21
COAL USED TO GENERATE ELECTRIC POWER IN U.S. WILL INCREASE BY 13 PERCENT TO 495 MMST IN 2021 - EIA
EIA expects U.S. coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an addi ...
Wednesday, 31 March 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.12 PCT - XINHUA
China Taiyuan coal transaction price index stood at 139.03 points Monday, up 0.12 percent week on week.
The index, released by China ...
Wednesday, 31 March 21
MARKET INSIGHT - INTERMODAL
Over the past week, the biggest story has been the blockage of the Suez Canal, as a result of the grounding of the container ship Ever Given. At th ...
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- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
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- Economic Council, Georgia
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- Billiton Holdings Pty Ltd - Australia
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- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
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- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Parliament of New Zealand
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- Star Paper Mills Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
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- Mintek Dendrill Indonesia
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- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
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- Ministry of Mines - Canada
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- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
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- Videocon Industries ltd - India
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- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Oldendorff Carriers - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
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- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
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- Posco Energy - South Korea
- New Zealand Coal & Carbon
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- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- The University of Queensland
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
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- Attock Cement Pakistan Limited
- Independent Power Producers Association of India
- ICICI Bank Limited - India
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- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- White Energy Company Limited
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