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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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Saturday, 16 October 21
DESPITE HIGHER COAL PRICES, U.S. COAL RECOVERY LOOKS WEAK BY MOST MEASURES - IEEFA
U.S. coal sector is locked into a long-term sectoral decline
Coal prices have surged to the highest level in years in the U.S., and have soare ...
Saturday, 16 October 21
COAL IS 'KING' AS GAS PRICES SOAR, TOTAL CEO SAYS - AND IT’S BACKFIRING ON CLEANER ENERGY GOALS - CNBC
Surging natural gas prices have led to a jump in coal use, with plants in Europe and Asia firing back up as temperatures decline and the world grap ...
Saturday, 16 October 21
VIETNAM'S COAL-FIRED POWER MAY DOUBLE BY 2030 UNDER DRAFT ENERGY PLAN - REUTERS
Vietnam may double the amount of coal-fired electric generation it installs by 2030 under a draft power development plan submitted to the prime min ...
Friday, 15 October 21
AUSTRALIA'S WHITEHAVEN EXPECTS TO BE DEBT-FREE NEXT YEAR AS COAL PRICES SOAR - REUTERS
Australia’s Whitehaven Coal WHC.AX said on Thursday it expects to be debt-free by early 2022, as thermal coal prices surge to record highs on ...
Friday, 15 October 21
WINTER CHILL KEEPS CHINA'S COAL PRICES HIGH, POWER CRUNCH STOKES INFLATION - REUTERS
China coal prices held near record highs on Thursday as cold weather swept into the country’s north and power plants stocked up on the fuel t ...
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- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
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- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
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