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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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Friday, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
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- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Parliament of New Zealand
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
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