We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effective in that sense. On the plus side, they help ship owners who order meet the latest regulations on shipping emissions, which are becoming ever so demanding. But, these vessels come at a heftier price tag, as much as 25% premium over regular ones. So one has to wonder, if the ship owners will his money back?
According to a relative analysis by Bimco's chief shipping analyst Peter Sand, this premium is financially and commercially viable. According to Sand, "our calculations show that, should you choose to invest in an ECO MR2-tanker, you could pay up to 25% more for your vessel before settling for a non-ECO MR2-tanker”. BIMCO has been looking at the basic economics of this development and can conclude that a fairly large premium can be paid on newbuildings to operate ECO ships instead of traditional ships. The calculations that are based on our assumptions, disclose that a 15% savings on fuel, potentially enables the owner of the ECO ship to charge extra up to the amount that is saved in fuel – which is USD 2,197 more per day than what a regular vessel can ever get obtain. The extra income means that a ship-owner can pay up to USD 8.31 million more for an ECO ship, for the investment to be equally good or better off as compared to a standard tanker. That is a premium of 25% when the standard vessel is priced at USD 33 million" he said.
Peter Sand also mentioned that "in the same way and based on the same fuel consumption and fuel prices assumptions, a ship-owner can pay up to USD 5.5 million more for an ECO ship for every 10% of fuel savings – or 17% more when a standard vessel is priced at USD 33 million. An obtainable premium to the market-given time charter rate (USD per day), where the charterer pays the fuel, is implied to be equal to an obtainable cost deduction on a market-given voyage charter rate (USD per tons) where the owner pays for the fuel".
So, what happens when one factors in the effect of fuel prices? "If the bunker prices go up the fuel-savings premium increases, making investments in ECO ships more viable. For each increase of USD 100 per tons in bunker prices the premium goes up by USD 338 per day, improving the net present value (NVP) of the investment by USD 1.3 million. A change to the fuel price tends to affect time-charter rates directly, but we fix the rate at USD 12,750 per day in the following calculations, which is the latest 1-year time-charter rate for a 47-48k products tanker according to CRSL. If the bunker price stays on the current level of USD 651 per ton the fuel-savings premium will not be high enough to make investment in an ECO ship profitable for a ship-owner; even the psychological barrier of USD 1,000 per ton will not make the investment sustainable with a negative net present value of USD 0.7 million. The bunker price has to exceed USD 1,060 per tons to make a new ECO ship an investment, with a positive NPV, if the ECO ship is priced at USD 33 million. In other words, bunker prices would have to increase by two-thirds ceteris paribus to make the investment viable under the circumstance of a fixed time-charter rate and OPEX level going forward" said the report.
It continued by mentioning that "at the current 1 year time-charter rate of 12,750 USD/day, a standard vessel does not meet its cash-breakeven rate making the investment unprofitable with an NPV loss of USD 13.5 million – more than the initial equity outlay. Even if we were able to secure the ECO ship at a cost of USD 33 million the investment will still be unprofitable, despite being able to charge a fuel-savings premium of 2,197 USD on top of the time-charter rate, making an NPV loss of USD 5.2 million.
The cash-breakeven cost for a vessel priced at USD 33 million is USD 13,928 a day covering the daily operating and financial expenses, but not return to equity, which explains why the time-charter rate plus the fuel-savings premium is not enough to make the investment in an ECO ship profitable in the current environment.
The effect of new-building prices
As stated above the current time-charter rates at a fixed level for the next 20 years are not high enough to sustain investments in new vessels at present new-building prices.
Returning to the benchmark case of 15% fuel savings and time-charter rates of 12,750 USD/day for a standard vessel, an ECO ship must not cost more than USD 27.8 million to be a profitable investment for a ship-owner. Comparably a standard vessel must cost as little as USD 19.5 million to be profitable in today’s market. “The current newbuilding prices reflect some optimism in the shipping industry. Higher freight rates are expected to be part of not too distant future. From our calculations two results are striking; Firstly, newbuilding prices are not as closely related to the present market condition as they normally are – and secondly, ECO ships seem to be the best profitable choice for the future fleet” adds Peter Sand.
The effect of time-charter rates
"Instead of changing the new-building prices, we now examine how high the time-charter rates must go before the purchase becomes profitable. For a standard vessel priced at USD 33 million, time-charter rates must be as high as USD 16,328 per day for the purchase to be sustainable – but rates have not been this high since mid-2009. If the ECO ship costs USD 33 million, the ship also needs to make USD 16,328 per day before the purchase is profitable; but a portion of the rate reflects the fuel-savings premium. By deducting the premium of USD 2,197 per day, we can compare the rate to the historical values observed by a standard vessel. This means that the base rate needs to be USD 16,328-2,197=14,131 per day before an ECO ship becomes a profitable investment. By looking at historical freight rates, this is achievable. The 10-year average for 2003-2012 is USD 19,214 per day for a 1-year TC for a 47,000-48,000 DWT products tanker. It should be noted that we have assumed that the whole advantage of the investment would go to the ship owner" the report concluded.
Source: Nikos Roussanoglou, Hellenic Shipping
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 13 September 12
PANAMAX: THE NEGATIVE TREND, POOR SENTIMENT CONTINUES - FEARNLEYS AS
Handy
Lack of cargoes and a growing list of available ships is causing rates to slip for all Atlantic trades.
The only trade keeping somewhat s ...
Wednesday, 12 September 12
INDIAS COALGATE: TIME FOR A ROOT CANAL
A recent report from India’s Comptroller and Auditor General (CAG) pertaining to the allocation of coal blocks has created a political storm i ...
Tuesday, 11 September 12
CLOUDY AND POLICY RISK INDONESIAN COAL INDUSTRY
COALspot.com - Bahana Securities in its latest coal outlook, commented on the Indonesian coal market, with economic slowdown in the four largest coa ...
Tuesday, 11 September 12
SHIP OWNERS KEEN ON SECOND HAND VESSEL PURCHASES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With most ship owners back from their summer rest, things are starting to pick up again in the second hand vessel market, with more and more deals b ...
Monday, 10 September 12
TNPL, AN INDIAN PAPER MAKER IS SEEKING FOR 300K MT OF IMPORTED NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 6 Shipments about 50,0 ...
|
|
|
Showing 4576 to 4580 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- Trasteel International SA, Italy
- MS Steel International - UAE
- Economic Council, Georgia
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- Indo Tambangraya Megah - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
|
| |
| |
|
