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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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Wednesday, 02 December 20
MARKET INSIGHT - INTERMODAL
It has been another busy week in the dry bulk secondhand market; a healthy number of sales reported predominantly from Japanese owners while owner& ...
Thursday, 26 November 20
DECLINE IN COAL EXPORTS ADDS TO NAVAJO-OWNED COMPANY'S PROBLEMS - IEEFA U.S.
Weak demand and low prices are likely creating steep losses for NTEC
U.S. coal exports to Asia—once heralded as the saving gra ...
Thursday, 26 November 20
COAL FINANCING QUICKLY DRYING UP WORLDWIDE - ANALYSTS : REUTERS
Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping ...
Wednesday, 25 November 20
LIBOR REPLACEMENT AND SHIP FINANCE - WHERE IS IT HEADING? - WFW
The likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. Th ...
Wednesday, 25 November 20
DRY BULK SHIPPING: CHINA REMAINS THE DRIVING FACTOR, BUT COAL POLICY IS DISRUPTING THE MARKET - PETER SAND, BIMCO
The second half of the year has provided some cheer for the dry bulk market, with all ships in the spot market averaging earnings above the break-e ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- PTC India Limited - India
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
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