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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, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
Wednesday, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
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- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- PetroVietnam Power Coal Import and Supply Company
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
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