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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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Tuesday, 29 December 20
CHINA COKING COAL FUTURES RISE FOR THIRD DAY ON SUPPLY WORRIES - REUTERS
Chinese coking coal futures extended gains into a third session on Monday, jumping as much as 6.2% as lower imports, sliding inventories and mines ...
Wednesday, 23 December 20
COKING COAL'S DECLINE LIKELY TO FOLLOW THE PATH OF THERMAL COAL’S PROGRESSIVE DEMISE - IEEFA
Technology disruption the likely theme of global energy markets in 2021
There has been a growing tsunami of climate commitment annou ...
Wednesday, 23 December 20
MARKET INSIGHT - INTERMODAL
As we all know, China forges more steel than the rest of the world combined, and even during this unprecedented pandemic, the nation is set to brea ...
Tuesday, 22 December 20
2021 DRY BULK OUTLOOK - SUPPLY GROWTH - TORVALD KLAVENESS
In the first article in the series we mentioned that dry bulk freight was in a super cycle between 2001 and 2008. The growth in global yard capacit ...
Tuesday, 22 December 20
INDIA'S COAL DEMAND IS SET TO EXPAND DESPITE PLUMMETING IN 2020 - IEA
Coal consumption in India amounted to 979 Mt in 2019, with the largest share being thermal coal (including lignite) for electricity generation (687 ...
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- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- White Energy Company Limited
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
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