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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, 16 November 21
INDONESIA’S 2022 COAL USE FOR POWER GENERATION SET TO RISE 3% - REUTERS
Indonesia’s coal consumption for power generation is likely to rise by 3.1% next year compared to 2021, the head of the country’s state ...
Tuesday, 16 November 21
CHINA'S MONTHLY COAL OUTPUT RISES TO HIGHEST SINCE MARCH 2015 - REUTERS
China’s October coal output rose to the highest since at least March 2015, after Beijing approved a raft of coal mine expansions to tame reco ...
Friday, 12 November 21
RUSSIA-INDIA COKING COAL DEAL UNLIKELY TO IMPACT PANAMAX SHIPPING - DREWRY
Russia and India have recently entered into an agreement whereby Russia will supply up to 40 million tonnes of coking coal to India every year. Dre ...
Friday, 12 November 21
ASIA COAL POWER PIPELINE TO SHRINK BY TWO THIRDS AFTER CHINA FINANCE CUT - REUTERS
Asia’s pipeline of proposed coal-fired power plants is expected to shrink from 65 gigawatts to 22 gigawatts following China’s pledge to ...
Friday, 12 November 21
INDONESIAN COAL PRICE REFERENCE TOPS $215 A TON; THE HIGHEST COAL PRICE IN HISTORY
COALspot.com: Indonesian Coal Price Reference in a steep climb for most of second half of 2021 as it reached a pinnacle of $215.01 in November 2021 ...
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- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Australian Coal Association
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Thiess Contractors Indonesia
- Planning Commission, India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- The University of Queensland
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
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