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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, 02 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Sojitz Corporation - Japan
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
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