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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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Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
Saturday, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
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- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Mercator Lines Limited - India
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
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