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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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Sunday, 13 December 20
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Tuesday, 08 December 20
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- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- MS Steel International - UAE
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- White Energy Company Limited
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
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