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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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Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, ...
Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
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- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
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- Romanian Commodities Exchange
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- Global Green Power PLC Corporation, Philippines
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- Energy Development Corp, Philippines
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- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
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- Petron Corporation, Philippines
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
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- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
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- Chamber of Mines of South Africa
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- AsiaOL BioFuels Corp., Philippines
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- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
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- Siam City Cement - Thailand
- VISA Power Limited - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
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- Wilmar Investment Holdings
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- Africa Commodities Group - South Africa
- White Energy Company Limited
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- Lanco Infratech Ltd - India
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- Central Electricity Authority - India
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Planning Commission, India
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- The State Trading Corporation of India Ltd
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- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
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- Parliament of New Zealand
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- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
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- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
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- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
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- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
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- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
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- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
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- GN Power Mariveles Coal Plant, Philippines
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- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
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