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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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Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
Friday, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
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- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Semirara Mining Corp, Philippines
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
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