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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, 22 December 20
SOUTHEAST ASIA'S COAL DEMAND IS SET TO EXPAND AFTER THE PANDEMIC-INDUCED HIATUS IN 2020 - IEA
Coal consumption in Southeast Asia has more than doubled in the last decade, with the largest growth in Indonesia and Viet Nam, followed by Malaysi ...
Tuesday, 22 December 20
COAL DEMAND IS RISING QUICKLY IN PAKISTAN AND MORE SLOWLY IN BANGLADESH - IEA
Pakistan had 150 MW of installed coal power capacity in 2015. Since 2017, in addition to a few small plants for industry, Pakistan has commissioned ...
Tuesday, 22 December 20
AFRICA PERSPECTIVE INDICATES NO MAJOR SHIFTS FOR COAL CONSUMPTION - IEA
Overall countries on the African continent consumed 197 Mt of coal in 2019, 12 Mt less (-6%) than 2018.
South Africa, the continent& ...
Monday, 21 December 20
COAL PRICES WITHSTAND DESPITE COVID-19 AND CHINESE IMPORT QUOTAS - IEA
Coal prices vary by region as well as by grade and quality. The price rebound starting in 2016 ended in 2018, moving in a downward trend in 2019. A ...
Monday, 21 December 20
COAL'S PARTIAL RECOVERY IS SET TO FADE AFTER 2021 - IEA
Global coal consumption is estimated to have fallen by 7%, or over 500 million tonnes, between 2018 in 2020. A decline of this size over a two-year ...
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- Medco Energi Mining Internasional
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- Sojitz Corporation - Japan
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- Ministry of Finance - Indonesia
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- Eastern Coal Council - USA
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- Indonesian Coal Mining Association
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
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- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
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- Metalloyd Limited - United Kingdom
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Siam City Cement - Thailand
- Economic Council, Georgia
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- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
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