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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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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
Will freight rates on Asia-Europe or the Transpacific reach 40.000 USD/FFE in the run-up prior to Chinese New Year 2022? Or will they start droppin ...
Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
The price of coal used in China’s power plants has surged to a new record high as another of the country’s key mining regions is hit by ...
Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Trasteel International SA, Italy
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Formosa Plastics Group - Taiwan
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