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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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Sunday, 01 November 20
GRADUAL RECOVERY FOR INDONESIAN COAL FROM 4Q20; RISKS REMAIN - FITCH RATINGS
Fitch Ratings expects the credit metrics of Indonesian coal miners and coal contractors to improve from 4Q20 with the recovery in volumes and price ...
Wednesday, 28 October 20
BIODIESEL - NEW FUELS, NEW CHALLENGES - GARD | DNV GL
KNOWLEDGE TO ELEVATE
One of numerous possible ways to comply with the IMO’s strategy on the reduction of greenhouse gas (GHG) emissions ...
Wednesday, 28 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.94 points Monday, up 0.35 percent week on week.
The index, released by China ...
Wednesday, 28 October 20
MARKET INSIGHT - INTERMODAL
The global strive towards eco-friendliness and environmental sustainability in the shipping industry is mounting. There are currently almost 200 co ...
Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
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- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
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