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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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Thursday, 21 January 21
LNG MARKET RIDING HIGH, BUT WILL THE GAINS CONTINUE? - DREWRY
The LNG market started 2021 on a high note with Asian spot prices crossing $30 per MMBtu while LNG shipping rates recorded a high $350k per day due ...
Thursday, 21 January 21
CHINA'S SPOT THERMAL COAL PRICES REFRESH RECORD HIGH - MYSTEEL
Despite the moderate rebound in temperatures across most regions of China after late December’s deep-freeze, thermal coal prices in the count ...
Wednesday, 20 January 21
CORONAVIRUS OUTBREAK IN HEBEI HAS LIMITED IMPACT ON CHINA'S STEEL INDUSTRY - FITCH RATINGS
The recent Covid-19 outbreak in the steel producing hub Hebei will not have material impact on China’s steel industry, Fitch Ratings says.
...
Wednesday, 20 January 21
MARKET INSIGHT - INTERMODAL
While 2020 is finally behind us, its negative impacts are still hovering over the shipping market. That being said, it is still too early to even s ...
Saturday, 16 January 21
SEABORNE TRADE IN STEAM COAL DECREASED BY 11.6% FROM 937 MILLION TONNES IN 2019 TO 828 MILLION TONNES IN 2020 - COAL IMPORTERS ASSOCIATION, GERMANY
According to preliminary calculations by the German Coal Importers Association (Verein der Kohlenimporteure e. V.), global hard coal production dec ...
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- Banpu Public Company Limited - Thailand
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- Orica Australia Pty. Ltd.
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- Georgia Ports Authority, United States
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- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
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- Agrawal Coal Company - India
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- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
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- Chamber of Mines of South Africa
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- Intertek Mineral Services - Indonesia
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- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
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- Electricity Generating Authority of Thailand
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- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
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- MS Steel International - UAE
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- Cement Manufacturers Association - India
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- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Planning Commission, India
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- PTC India Limited - India
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
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- New Zealand Coal & Carbon
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- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Iligan Light & Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- White Energy Company Limited
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- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Central Electricity Authority - India
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- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
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- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
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