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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.
The Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Tuesday, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
Thursday, 27 May 21
KOMIPO INVITED BIDS FOR 1.56 MILLION TONS OF BITUMINOUS COAL
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 ...
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- SN Aboitiz Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Australian Coal Association
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Bhatia International Limited - India
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
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