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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, 23 December 21
COAL DEMAND TO PEAK IN INDIA BY 2030, WILL BACK UP RENEWABLES: NITI REPORT - BUSINESS STANDARD
Coal will remain India’s mainstay energy source and the country will shape global demand this decade, two reports have said a month after the ...
Thursday, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
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- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- The University of Queensland
- Australian Coal Association
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
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