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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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Tuesday, 25 May 21
KOREA SOUTHERN POWER INVITED BIDS FOR 870,000 MT OF MIN 5300 NCV COAL FOR 2021 TO 2023.
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 870,000 MT of Min 5,300 kcal/kg NCV coal for Augu ...
Tuesday, 25 May 21
CHINA’S COAL OUTPUT RISES IN FIRST FOUR MONTHS - XINHUA
China’s raw coal output rose 11.1 percent year on year to 1.29 billion tonnes in the first four months of 2021, official data showed.
&nb ...
Tuesday, 25 May 21
MARINE SHIPPERS BULK UP: ANOTHER GAME OF CHICKEN IN THE WORKS? - THE KOREA TIMES
Global shipping companies have been placing orders for large ships, with many anticipating further increased competition within the next three year ...
Friday, 21 May 21
MARKET INSIGHT - INTERMODAL
The dry bulk market’s counter seasonal surge so far into the first half of the year -in a sort of 2010 manner - and Capesize’s recent r ...
Wednesday, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
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- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- The University of Queensland
- White Energy Company Limited
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
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