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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, 12 May 21
MARKET INSIGHT - INTERMODAL
Tanker S&P is finally back!
For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...
Monday, 10 May 21
PAKISTAN: COAL GASIFICATION AND LIQUEFACTION HARMFUL TO ECONOMY - IEEFA
There is no second life for coal
Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...
Sunday, 09 May 21
HERE'S WHY INVESTORS ARE POURING MONEY INTO COAL, DESPITE ITS BLEAK FUTURE - FORBES
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...
Sunday, 09 May 21
MAYBANK TO STOP COAL FINANCING - BERNAMA
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.
Currently, coal financing m ...
Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
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- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Aditya Birla Group - India
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Xindia Steels Limited - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Minerals Council of Australia
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