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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, 26 October 21
CHINA'S COAL-RICH SHANXI BEEFS UP COAL PRODUCTION - XINHUA
Major coal producers in north China’s Shanxi Province, a leading coal-producing region of the country, have beefed up production to ensure en ...
Tuesday, 26 October 21
ENERGY CRISIS SHOWS COAL IS AN EXPENSIVE AND UNRELIABLE SOURCE OF ELECTRICITY GENERATION - IEEFA
Any knee-jerk reaction that urges more investment in coal completely misses the point
India is teetering on the brink of joining a growing glo ...
Tuesday, 26 October 21
CHINA TO INVESTIGATE ENERGY INDEX PROVIDERS IN BID TO TAME COAL PRICES - REUTERS
China said on Monday it will investigate energy price index providers as it urged coal industry participants to “strictly” meet contrac ...
Tuesday, 26 October 21
THERE IS PLENTY OF COAL AND GAS IN THE WORLD BUT A VOLATILE MARKET IS NOBODY'S FRIEND - IEEFA
Gas will be winding its way out of the energy system
Gas prices are continuing to surge around the world. The cost of gas is at unpr ...
Tuesday, 26 October 21
AUSTRALIA EXPORTED 51.6 MLN TONNES OF COAL TO INDIA IN FIRST 10 MONTHS, 19% OF ALL AUSTRALIAN COAL EXPORTS; CHINA WAS THE DESTINATION FOR JUST 0.7% - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. In 2021 things started pretty badly, but we are seeing increasing signs of ...
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- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
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