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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, 13 November 20
SHIPPING OUTLOOK TURNS STABLE ON EBITDA GROWTH, IMPROVING SUPPLY-DEMAND BALANCE - MOODY’S
Outlook revised to stable from negative.
The global shipping industry is on course to perform better overall than we had previously ex ...
Friday, 13 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 ...
Monday, 09 November 20
INDONESIA MAY CUT BIODIESEL USE TARGET AS SUBSIDY FUND DEPLETES - FITCH
The Indonesian government may rein in its push to increase use of biodiesel as it now comes at higher cost following a fall in crude oil prices and ...
Monday, 09 November 20
SOUTH AFRICA: COAL MARKET CONDITIONS HAVE ' DETERIORATED MATERIALLY' - IEEFA
The Asian seaborne thermal coal pool is drying out
Resource Generation Ltd’s proposed but long delayed Boikarabelo coal mine i ...
Friday, 06 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 ...
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- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Videocon Industries ltd - India
- The University of Queensland
- Planning Commission, India
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
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