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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, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
Wednesday, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
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- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Planning Commission, India
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Mintek Dendrill Indonesia
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