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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, 06 January 21
INDONESIA EXCEEDS COAL PRODUCTION TARGET IN 2020
Indonesian coal production reached 557.54 Million Tons in 2020 1.37% higher than of last year’s total target of 550.00 Million Tons, accordin ...
Wednesday, 06 January 21
CHINESE CITIES REPORTEDLY GO DARK AS COUNTRY FACES SHORTAGE OF COAL, A MAJOR AUSTRALIAN EXPORT - CNBC
Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.
Analysts said pr ...
Tuesday, 05 January 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP - XINHUA
China Taiyuan coal transaction price index stood at 136 points Monday, up 0.91 percent week on week.
The index, released by China Ta ...
Tuesday, 05 January 21
THE INDONESIA COAL PRICE REFERENCE SOARS TO HIGHEST ONE-MONTH INCREASE SINCE DECEMBER 2016
COALspot.com: The Indonesia coal price reference for January 2021 settles above $75 for the first time since July 2019 and to highest one-month inc ...
Monday, 04 January 21
U.S. RENEWABLE ENERGY CONSUMPTION SURPASSES COAL FOR THE FIRST TIME IN OVER 130 YEARS - EIA
In 2019, U.S. annual energy consumption from renewable sources exceeded coal consumption for the first time since before 1885, according to the U.S ...
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- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Latin American Coal - Colombia
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- Goldman Sachs - Singapore
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- Wilmar Investment Holdings
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- ASAPP Information Group - India
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
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- Videocon Industries ltd - India
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- Renaissance Capital - South Africa
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- Pipit Mutiara Jaya. PT, Indonesia
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- Oldendorff Carriers - Singapore
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- Kumho Petrochemical, South Korea
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
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- SMC Global Power, Philippines
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- Planning Commission, India
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- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
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- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
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- Energy Link Ltd, New Zealand
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- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- PTC India Limited - India
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Parliament of New Zealand
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- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
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- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
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- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
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- Petron Corporation, Philippines
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- Standard Chartered Bank - UAE
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- Attock Cement Pakistan Limited
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- Mercuria Energy - Indonesia
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- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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