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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, 07 October 20
MARKET INSIGHT - INTERMODAL
The challenges brought forward in 2020 proved to be very different from what we could have ever imagined. Together with placing a significant strai ...
Tuesday, 06 October 20
KOSPO TO IMPORT 80,000 MT OF 3,800 NCV COAL FOR 2H NOV
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 MT Min.3800 kcal/kg NCV coal 2H November, 2020 l ...
Friday, 02 October 20
THE INDONESIA COAL PRICE REFERENCE RISE AFTER HISTORIC CRASH TO US$ 49.42
COALspot.com: The Indonesia Coal Price Reference for the month of October Rise to US$ 51.00 after historic crash to US$ 49.42 in September 2020.
...
Friday, 02 October 20
SRI LANKA MUST LEARN LESSONS FROM AROUND ASIA TO AVOID FURTHER ELECTRICITY CRISES - IEEFA
Overcommitment to fossil-fuelled power generation is leading to excess capacity and rising capacity payments, subsidies, and tariffs around the con ...
Wednesday, 30 September 20
MARKET INSIGHT - INTERMODAL
Spot rates for Capesize bulk carriers received a significant boost last week, however, there are certain reservations in the market regarding the p ...
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- Port Waratah Coal Services - Australia
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- CNBM International Corporation - China
- The University of Queensland
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- Aditya Birla Group - India
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- Metalloyd Limited - United Kingdom
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- Australian Coal Association
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- Georgia Ports Authority, United States
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- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
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- Kumho Petrochemical, South Korea
- Electricity Generating Authority of Thailand
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- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
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- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
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- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
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- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
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- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
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- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
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- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
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- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
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- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
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- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
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- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Mercator Lines Limited - India
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- London Commodity Brokers - England
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- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
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- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
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- Power Finance Corporation Ltd., India
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- Vijayanagar Sugar Pvt Ltd - India
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- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
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- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
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- Formosa Plastics Group - Taiwan
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- SN Aboitiz Power Inc, Philippines
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