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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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Saturday, 29 August 20
COAL INDIA'S FUEL SUPPLY TO POWER SECTOR DROPS ABOUT 20% IN APR-JUL: PTI
State-owned Coal India”s fuel supply to the power sector registered a decline of 19.5 per cent to 126.30 million tonnes (MT) in the April-Jul ...
Saturday, 29 August 20
SOUTH KOREAN BROKERAGE FIRM KOREA INVESTMENT & SECURITIES TO STOP ALL COAL BUSINESS - KOREA HERALD
South Korean brokerage firm Korea Investment & Securities has decided to stop its investments in coal, in line with the Moon Jae-in administrat ...
Thursday, 27 August 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 985,000 TONS OF BITUMINOUS COAL FOR NOVEMBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 985,000 ...
Thursday, 27 August 20
SOUTHEAST ASIAN NATIONS SET REGION-WIDE RENEWABLE ENERGY GOAL OF 23 PERCENT BY 2025 - ASEAN POST
The Association of Southeast Asian Nations (ASEAN) has set an ambitious target of securing 23 percent of its primary energy from renewable so ...
Thursday, 27 August 20
BANGLADESH POWER MINISTRY SEEKING AUTHORITY TO CANCEL 13,000 MW OF PROPOSED COAL-FIRED CAPACITY - BUSINESS STANDARD
In a bid to move away from dirty energy, the Ministry of Power, Energy and Mineral Resources is seeking the prime minister’s approval to conv ...
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- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Planning Commission, India
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
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