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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, 21 February 21
ANZ DIVESTING FROM THE WORLD’S LARGEST COAL EXPORT PORT IS 'PRAGMATISM' - IEEFA
The biggest buyers of Australian thermal coal have committed to net-zero emissions
ANZ, Australia’s third largest bank, has decided to s ...
Sunday, 21 February 21
EDITORIAL: TIME FOR BANGLADESH TO FOCUS ON RENEWABLE ENERGY, NOT COAL - DHAKA TRIBUNE
Shifting away from coal is not only desirable, but absolutely necessary in these times.
In spite of being detrimental to environment ...
Wednesday, 17 February 21
STRANDED ASSETS A LONG-TERM RISK FOR MAJOR FOSSIL FUEL EXPORTERS - FITCH RATINGS
Fossil exporters face a loss of GDP, government revenue and export receipts from the transition to a lower-carbon economy over the coming decades. ...
Friday, 12 February 21
U.S: WIND SURPASSED COAL AS NO. 1 FUEL SOURCE IN 2020 FOR SOUTHWEST POWER POOL - IEEFA
Wind energy growth due to geography, design factors, and new installations
Wind surpassed coal as the primary power generation sourc ...
Wednesday, 10 February 21
FY21 COAL DEMAND MAY BE LOWER THAN PREVIOUSLY ESTIMATED DUE TO COVID-19: PRALHAD JOSHI - PTI
Coal demand in the current fiscal may be lower than the initial estimate of 1,085 million tonnes (MT) due to the impact of COVID-19, Parliament was ...
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- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Australian Coal Association
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
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