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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, 08 December 20
PANAMAX: THE OVERALL MARKET SEEMS TO BE UNDER NEGATIVE PRESSURE - ALLIED
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Friday, 04 December 20
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China’s benchmark power coal price rose slightly during the past week.
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Friday, 04 December 20
THE INDONESIA COAL PRICE REFERENCE REACHES THREE MONTH HIGH ON IMPROVING DEMAND OUTLOOK
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Wednesday, 02 December 20
GLOBAL MINING SECTOR OUTLOOK STABLE DUE TO CHINA'S RECOVERY - FITCH RATINGS
China’s post-pandemic economic recovery and sizeable infrastructure-focused government stimulus boosted global metals and mining prices, help ...
Wednesday, 02 December 20
INDONESIA CONSIDERING CLOSING 3,400MW SURALAYA COAL PLANT - THE JAKARTA POST
The government is considering to shut down the aging Suralaya coal-fired power plant (PLTU) in Cilegon, Banten, and replace it with green energy, a ...
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- Carbofer General Trading SA - India
- The Treasury - Australian Government
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- Binh Thuan Hamico - Vietnam
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- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
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- McConnell Dowell - Australia
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- Directorate General of MIneral and Coal - Indonesia
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- Georgia Ports Authority, United States
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- Ministry of Transport, Egypt
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- Economic Council, Georgia
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- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
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