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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, 10 February 21
MARKET INSIGHT - INTERMODAL
We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of ...
Tuesday, 09 February 21
SWITCHING COAL PLANTS TO PLN'S BIOMASS COFIRING PLAN IS NO MAGIC BULLET - IEEFA
Implementation risks for Indonesia PLN's switch from coal to biomass cofiring
PLN’s biomass cofiring plan will require not ...
Friday, 05 February 21
THE INDONESIA COAL PRICE REFERENCE FOR FEBRUARY 2021 SETTLES AT US$ 87.79 PER TON FOB VESSEL
COALspot.com: The Indonesia coal price reference for February 2021 settles at US$ 87.79 per ton FOB vessel. The February reference price is the hig ...
Thursday, 04 February 21
WHY BANGLADESH SHOULDN’T COUNT ON A FOSSIL FUEL FUTURE - IEEFA
Around US$50 billion of LNG projects in Asia at risk of cancellation
Two astonishing figures have circulated in the Asian energy sector in the ...
Wednesday, 03 February 21
INDONESIA TO EXPORT 395 MILLION TONS OF COAL IN 2021 - ESDM
Data from the Ministry of Energy and Mineral Resources shows that, Indonesia is planning to produce 550 million Ton of coal in 2021 and as of t ...
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- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Minerals Council of Australia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
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