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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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Tuesday, 29 September 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.73 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.91 points Monday, up 0.73 percent week on week.
The index, released by China ...
Tuesday, 29 September 20
SHIPPING MARKET - ALLIED
Here we are, just a short breath before the final quarter of the year, and many are now debating to what extent we can really expect a firm dry bul ...
Tuesday, 29 September 20
INDONESIAN COAL COMPANIES' EARNINGS TO WEAKEN IN 2H20 - FITCH RATINGS
Rated Indonesian coal miners and contractors will have weaker operating and financial performances in the second half of 2020 than in the first, sa ...
Tuesday, 29 September 20
RUSSIA'S COAL PRODUCTION TO DROP BY 10.5% IN 2020, SAYS MINISTRY - TASS
Russia’s Economic Development Ministry projects a 10.5% decrease in coal production in the country in 2020 compared with last year to 395 mln ...
Monday, 28 September 20
NEW LNG PROJECTS - ALL DRESSED UP AND NO PLACE TO GO - WOOD MACKENZIE
It was meant to be another boom year. After a record 70 mmtpa of new LNG capacity was sanctioned in 2019, at least as much capacity was lined up fo ...
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- Kideco Jaya Agung - Indonesia
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- Minerals Council of Australia
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- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
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- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
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- Vizag Seaport Private Limited - India
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- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Economic Council, Georgia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
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- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
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- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Eastern Energy - Thailand
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- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
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- SMG Consultants - Indonesia
- Central Electricity Authority - India
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- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
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- Renaissance Capital - South Africa
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- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Australian Coal Association
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- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
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