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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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Thursday, 10 June 21
INDONESIA COAL EARNINGS RECOVERY TO SLOW AFTER STRONG 1Q - FITCH RATINGS
Fitch Ratings expects the recovery in operating and financial performance of Indonesian coal miners and coal contractors to slow during rest of 202 ...
Thursday, 10 June 21
U.S. COAL PRODUCTION TO TOTAL 600 MMST IN 2021, 11% MORE THAN IN 2020 - EIA
EIA expects U.S. coal production to total 600 million short tons (MMst) in 2021, which is 61 MMst (11%) more than in 2020.
The increase is dri ...
Wednesday, 09 June 21
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
The In-Person Maritime Event
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
culminates successfully in Dubai
Press Release: ...
Saturday, 05 June 21
KOMIPO INVITED 5600 NAR COAL OFFERS FOR THREE YEARS SUPPLY; 520,000 MT PER YEAR
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Saturday, 05 June 21
IT'S TIME FOR THE BIDEN ADMINISTRATION TO CHAMPION RENEWABLE ENERGY IN THE PHILIPPINES, NOT NUCLEAR OR FOSSIL GAS - IEEFA
Fossil gas and nuclear investments risk locking in costly, outdated infrastructure for the long-term
The United States has spent the ...
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- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Carbofer General Trading SA - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Planning Commission, India
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Malabar Cements Ltd - India
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
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