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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, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
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- Global Green Power PLC Corporation, Philippines
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- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
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- Global Coal Blending Company Limited - Australia
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- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
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- Kohat Cement Company Ltd. - Pakistan
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- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Central Electricity Authority - India
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
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- Xindia Steels Limited - India
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- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kepco SPC Power Corporation, Philippines
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- Borneo Indobara - Indonesia
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- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
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- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
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- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Parliament of New Zealand
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
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- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
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- Standard Chartered Bank - UAE
- The University of Queensland
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- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
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- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
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- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
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- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
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- Indian Energy Exchange, India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
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- Salva Resources Pvt Ltd - India
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- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
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- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
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- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
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- GAC Shipping (India) Pvt Ltd
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