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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, 19 August 20
MISC MARKS ITS MAIDEN FORAY INTO MAJOR DEEP-WATER PROJECT IN LATIN AMERICA WITH MERO 3 FPSO
MISC Berhad (MISC) is pleased to announce its acceptance of Letter of Intent (LOI) from Petróleo Brasileiro S.A. (Petrobras) for the provisi ...
Wednesday, 19 August 20
MARKET INSIGHT - GEORGE LAIOS | INTERMODAL
Since the Covid-19 outbreak, governments and central banks around the globe have been using their ammunition and stimulus packages to keep their ec ...
Wednesday, 19 August 20
INDIA SAW A SHARP DECLINE IN ENERGY COAL IMPORTS IN JANUARY - JUNE 2020; –27 PER CENT YOY - BHP
Energy coal prices were weak in the second half of financial year 2020, BHP says in its Economic and Commodity Outlook FY20.
Accordi ...
Wednesday, 19 August 20
COAL PRICES TO REMAIN SUBDUED THIS FISCAL AMID WEAK DEMAND, HIGH INVENTORY - THE HINDU BUSINESS LINE
Coal offtake is improving gradually as lockdown eases
Coal prices are expected to remain subdued to weak demand and high inventory l ...
Tuesday, 18 August 20
BLACKBALLED: WILL COAL BOUNCE BACK FROM SLUMP OR IS IT TERMINAL? - SYDNEY MORNING HERALD
Even by the standards of this miserable year, 2020 has been a shocker for the global coal industry.
As the lockdown kicked in demand ...
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- Kepco SPC Power Corporation, Philippines
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
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- Commonwealth Bank - Australia
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- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
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- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
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- Directorate General of MIneral and Coal - Indonesia
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- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
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- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
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- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
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- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
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- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
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- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
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- Merrill Lynch Commodities Europe
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- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
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- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
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- Marubeni Corporation - India
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
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- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
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- Edison Trading Spa - Italy
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- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
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- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- The University of Queensland
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
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- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
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- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
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- Karaikal Port Pvt Ltd - India
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- Planning Commission, India
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- Australian Coal Association
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- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
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