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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, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
Saturday, 11 September 21
RECORD CHINESE COAL FUTURES SIGNAL NEED TO BOOST OUTPUT - REUTERS
China’s coal prices have climbed to a record high, signaling the need for more production in the short term, even as the government tries to ...
Saturday, 11 September 21
IN 2022, EIA EXPECTS U.S. COAL PRODUCTION TO INCREASE BY 47 MMST TO 648 MMST
U.S. Coal production accordng to EIA's forecast, totals 601 million short tons (MMst) in 2021, 66 MMst more than in 2020, EIA's Short-Term ...
Wednesday, 08 September 21
FITCH RATINGS RAISES THERMAL COAL PRICE ASSUMPTIONS ON TIGHT SUPPLY
Fitch Ratings has increased all its Qinhuangdao 5,500kcal/kg price assumptions and short- and medium-term Newcastle 6,000kcal/kg price assumptions ...
Wednesday, 08 September 21
COAL IS STILL KING; INDONESIAN COAL PRICE REFERENCE ABOVE $150 FOR FIRST TIME IN HISTORY
COALspot.com: The Indonesian Coal Price Reference rose dramatically from US$ 127.05 in February 2011, to a peak of US$ 150.03 in September 2021, be ...
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- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Larsen & Toubro Limited - India
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
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