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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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Friday, 20 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 19 November 20
MARKET INSIGHT - INTERMODAL
As we are moving towards the end of the year, the overall deal landscape of the dry bulk sector corresponding to the second half of 2020 (up to dat ...
Tuesday, 17 November 20
COAL SQUEEZE INTENSIFIES - BALTIC EXCHANGE
The message from the top is clear: cut out coal. While the regulatory pressure has been evident for some time, the race to banish the black stuff s ...
Tuesday, 17 November 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 128.72 points Monday, up 0.35 percent week on week.
The index, released by China ...
Tuesday, 17 November 20
AUSTRALIAN COAL EXPORTS TO CHINA SLUMP, BUT PRICES ARE MIXED - REUTERS
China’s unofficial ban on coal imports from Australia is starting to take its toll on volumes, with departing cargoes down sharply so far in ...
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- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
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- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
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- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
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- Madhucon Powers Ltd - India
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- Electricity Authority, New Zealand
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- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
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- Savvy Resources Ltd - HongKong
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
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- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
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- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
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- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Cement Manufacturers Association - India
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- McConnell Dowell - Australia
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- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
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- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
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- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
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- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
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- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- ICICI Bank Limited - India
- Australian Coal Association
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
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- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
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