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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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Friday, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
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- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Economic Council, Georgia
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- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
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