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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, 28 September 21
THE MAIDEN EDITION OF DIVE TECHNOLOGY SUMMIT 2021 CONCLUDES SUCCESSFULLY
Press Release: DIVE TECHNOLOGY SUMMIT 2021, a one-day conference on the recent technological advancements in the Industrial Diving industry conclud ...
Monday, 27 September 21
CHINESE COAL FIRMS MEET TO ADDRESS WINTER SUPPLY CHALLENGES - CNBC
Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, ...
Saturday, 25 September 21
HIGH STAKES FOR ASIAN DEVELOPMENT BANK’S AMBITIOUS COAL POWER RETIREMENT PLAN - IEEFA
Implementation challenges could block funding for other equally important high impact clean energy funding strategies
In the lead up ...
Thursday, 23 September 21
LONGER COAL CONTRACTS MAY REIN IN PRICES - ECNS
In China’s coal sector that has been marred recently by price surges, regional authorities and related enterprises should ensure the fuel con ...
Thursday, 23 September 21
BALTIC INDEX HITS 12-YEAR PEAK ON FIRMER VESSELS RATES - REUTERS
The Baltic Exchange’s main dry bulk sea freight index rose for a fourth straight session on Wednesday to a 12-year high, buoyed by higher rat ...
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- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Planning Commission, India
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- The University of Queensland
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
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