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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, 11 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 ...
Tuesday, 09 November 21
ASIA-PACIFIC IS HOME TO SOME OF THE WORLD'S LARGEST CARBON-EMITTERS - 2 CHARTS SHOW ITS RELIANCE ON COAL - CNBC
Asia-Pacific is home to some of the world’s largest carbon emitters — and experts say much of global efforts to fight climate change de ...
Tuesday, 09 November 21
CHINA DAILY COAL OUTPUT HITS MULTI-YEAR PEAK, PRICES EXPECTED TO FALL - REUTERS
China’s daily coal output hit 11.93 million tonnes last week, a multi-year high as more capacity returned to operation, the state planner sai ...
Thursday, 04 November 21
CHINA'S COAL MARKET SEES SIGNIFICANT IMPROVEMENTS: NDRC - GLOBAL TIMES
China’s top economic planner has declared initial success in its efforts to ensure coal supply and stabilize prices, saying that daily coal o ...
Thursday, 04 November 21
CHINA THERMAL COAL PRICES RISE AFTER FALLING FOR 10 DAYS - REUTERS
China thermal coal futures rebounded on Wednesday after falling for 10 days on an expected jump in fuel demand to meet heating needs amid forecasts ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- The University of Queensland
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Africa Commodities Group - South Africa
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
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