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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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Thursday, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
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- Indo Tambangraya Megah - Indonesia
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- TeaM Sual Corporation - Philippines
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- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
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- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
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- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
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- SMC Global Power, Philippines
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- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
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- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Leighton Contractors Pty Ltd - Australia
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- Merrill Lynch Commodities Europe
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- Ambuja Cements Ltd - India
- Minerals Council of Australia
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- Ministry of Transport, Egypt
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- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
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- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Ministry of Finance - Indonesia
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- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
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- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
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- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
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- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
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- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
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- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
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- Singapore Mercantile Exchange
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- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- The University of Queensland
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- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
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- White Energy Company Limited
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- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
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- The Treasury - Australian Government
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- Madhucon Powers Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Medco Energi Mining Internasional
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