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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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Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
Friday, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
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- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- The University of Queensland
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Latin American Coal - Colombia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- PTC India Limited - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
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