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Wednesday, 09 June 21
MARKET INSIGHT - INTERMODAL
 “Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquired asset exposes the buyer less. This has always been the essence of investing in most industries. Of course, like everything else, it’s is easier said than done when a market is going through a trough. Apart from the purchase cost, you still have to spend money in order to subsidize the asset until the market recovers. And of course, there is always the question of whether the market has reached a bottom or not. Anyway, all of these are known.
So now that we are experiencing a bullish dry bulk market and a phenomenal container market, it might be logical to speculate that tankers are not far behind on their way to recovery. With that said, investing in tankers is the only counter cyclical move you could do today at least within the 3 vanilla sectors.
Currently, the tanker market continues to remain weak on the back of constrained oil supply from OPEC+, but last year’s record high crude oil inventories have drawn down extensively, currently are at the bottom of the 5 year average range. At the same time, oil demand is set to recover signaling that the tanker trough might be hopefully ending. Goldman Sachs projects oil demand to increase by +5.0 million barrels per day over the next 6 months, with this summer particularly likely to witness the biggest ever oil demand increase. Additional oil supplies will need to flow into the market; OPEC+ has already decided to gradually increase production through July. A favorable scenario would dictate a further increase in OPEC+ supply by Q4, even if Iranian barrels return to the market, in order to cope with the demand.
But up to this date, despite a lackluster tanker freight market, asset values have increased as underlying steel prices have reached record high levels providing support. The increase in tanker asset values has been more pronounced for younger units, where the majority of SnP interest lies, rather than older ones.
Since January, approximately 124 tankers have changed hands, with the majority being AFRAs (58), followed by VLCCs (41) and SUEZMAXs (25). It makes sense for shipowners to look into buying second hand crude ships purely out of speculation as a tanker recovery is well overdue. The majority of the ships sold were in the 13-17 years age bracket, mostly due to high supply of candidates (e.g. approx. 38% of the Aframax fleet is above 15Y Old). It is certain that a lot of buyers bidding on 12-13 year ships would also go after 10Y or 8Y old tonnage if there was availability.
Recently, we have seen an increase in interest for ships built in after 2010 and almost no interest for older ships with the asset value gains shaped accordingly. Indicatively, 10Y old Aframax values are estimated to have increased by +27.0% since Q4 2020, while 15Y old values have only gained +14.0% over the same period. It might make sense to assume that since the anticipated recovery is yet to be seen, buyers are not willing to risk it on older ships. But given what we are currently witnessing on the dry and box sectors is this wise?
We see 10-15 year old container ships that a year ago might have being sold at demolition levels now being fixed for 4-5 years in the low 40k for further trading. We are witnessing the so called obsolete 28k handy fetching above 20k p/d. Although the tanker regulatory environment, makes older crude tankers less competitive in traditional trades where oil majors are involved even in a tanker recovery, the 15Y Old to 5Y old ratio at this point being at approx. 40% (the lowest we have seen is 30% during 2013 and the highest 60% during 2009) might be enticing enough to invest into an older asset and take advantage of a broader tanker market recovery in the near future. In other words, even older units can benefit in a market recovery.
As in the famous quote “A rising tide lifts all boats.”
By Timos Papadimitriou,
SnP Broker
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, 16 June 21
MARKET INSIGHT - INTERMODAL
“While approaching the second half of the year and summer season is just around the corner, COVID vaccination programs are steadily moving fo ...
Monday, 14 June 21
'WISHFUL THINKING': WHY CHINA NEEDS AUSTRALIAN IRON ORE FOR 'MANY YEARS' TO COME - YAHOO FINANCE AU
A “wintry period”.
That’s what’s expected to happen to Australia’s economy “when” China st ...
Sunday, 13 June 21
COAL AND LNG’S SURGE IN ASIA PLAYS INTO RENEWABLE ENERGY HANDS - REUTERS
Liquefied natural gas (LNG) and thermal coal prices in Asia have been roaring ahead in recent months amid strong demand, but while welcome news for ...
Friday, 11 June 21
5 REASONS GLOBAL SHIPPING COSTS WILL CONTINUE TO RISE - ING
No short-term relief
Shipping costs have been growing strongly since the autumn of 2020, but the first months of this year have seen a new surg ...
Friday, 11 June 21
ASIA COAL PRICES SURGE, BUT CHINA-AUSTRALIA DISPUTE MEANS RALLY IS UNEVEN - REUTERS
Thermal coal prices across Asia have surged to multi-year highs amid strong demand and some supply constraints, but some types of the fuel have don ...
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- Latin American Coal - Colombia
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- The University of Queensland
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Altura Mining Limited, Indonesia
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
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