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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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Tuesday, 14 December 21
COAL LOCK-IN IN SOUTHEAST ASIA PRESENTS A CHALLENGE FOR THE ASIAN DEVELOPMENT BANK'S COAL RETIREMENT PLAN - IEEFA
In August, the Asian Development Bank (ADB) announced an ambitious plan to buy high emissions coal-fired power plants in Southeast Asia and retire ...
Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
With the Brent price recently touching the $80 mark and before the Omicron variant concerns pushed it lower, bunker prices reached levels not seen ...
Tuesday, 07 December 21
SUPERCYCLE DEMAND: ARE WE THERE YET? - WOOD MACKENZIE
Taking young children on a long journey is fraught with challenges, not least the inevitable question a few minutes after leaving: are we there yet ...
Tuesday, 07 December 21
COAL WOULD REMAIN ENERGY LEADER FOR AT LEAST 15 YEARS - LIVEMINT
Coal India Ltd (CIL) has been in the eye of the storm after fuel stocks at coal-fuelled power plants depleted in October. Fuel stocks since are bei ...
Tuesday, 07 December 21
GLOBAL SHIPPING OUTLOOK TURNS STABLE FROM POSITIVE ON THE BACK OF PEAKING EARNINGS DURING 2021 - MOODY'S
The outlook for the global shipping industry is changed to stable from positive for the next 12 to 18 months due to demand slightly outstripping su ...
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- London Commodity Brokers - England
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- Lanco Infratech Ltd - India
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- The State Trading Corporation of India Ltd
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- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
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- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
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- Australian Coal Association
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- McConnell Dowell - Australia
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- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
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- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
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- Indonesian Coal Mining Association
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- Indika Energy - Indonesia
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- Electricity Authority, New Zealand
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- Metalloyd Limited - United Kingdom
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- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
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- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- The University of Queensland
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
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