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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, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
Wednesday, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
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- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- The University of Queensland
- Simpson Spence & Young - Indonesia
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Planning Commission, India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
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