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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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Thursday, 05 November 20
THE INDONESIA COAL PRICE REFERENCE RISES FOR SECOND CONSECUTIVE MONTH
COALspot.com: The Indonesia Coal Price Reference rose for a 2nd month by 9.24% month on month. The Indonesia Coal Price Reference for the month of ...
Wednesday, 04 November 20
PHILIPPINES COAL MORATORIUM HIGHLIGHTS DRAMATIC PIVOT TO RENEWABLE ENERGY INVESTMENT FOR LOWER PRICES AND POWER SYSTEM RESILIENCE - IEEFA
Policymakers and industry leaders ready to embrace new energy technologies
The Department of Energy’s call for a moratorium on ...
Wednesday, 04 November 20
FOREIGN INVESTORS FACE TOUGH TIMES CLOSING VIETNAM’S REMAINING COAL POWER DEALS - IEEFA
Project bankability at risk as new regulations threaten usual contractual terms
Foreign investors will face higher-than-usual risks ...
Wednesday, 04 November 20
MARKET INSIGHT - INTERMODAL
As the end of the year approaches, one would definitely notice that the newbuilding orderbook for bulk carriers is significantly smaller compared t ...
Monday, 02 November 20
PHILIPPINES GOVERNMENT SAYS NO TO NEW COAL PLANT PROPOSALS - IEEFA | 24 PILIPINAS
The Duterte administration will no longer accept proposals to construct new coal power plants, a dramatic shift in energy policy that counts on dec ...
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- VISA Power Limited - India
- India Bulls Power Limited - India
- Parliament of New Zealand
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
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