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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
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Tuesday, 14 August 12
UNCERTAIN FUTURE FOR DRY BULK PANAMAX SHIPS - DREWRY / HELLENIC SHIPPING
The dry bulk shipping market is in a poor state, with the Capesize segment the worst of all. Unfortunately, the latest analysis from Drewry Maritime ...
Monday, 13 August 12
5TH VIETNAM PORTS AND LOGISTICS 2012
Press Release - Co-hosted by VINAMARINE, the 5th Vietnam Ports and Logistics2012 will feature dedicated sessions on port and transport infrastructur ...
Monday, 13 August 12
ACTIVE DRY BULK FLEET INCREASES BY 8% SO FAR IN 2012 IN TERMS OF TONNAGE CAPACITY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
It’s no wonder that the dry bulk market has been tethering since the start of the year. the overflow of tonnage has been so enormous, that eve ...
Sunday, 12 August 12
COAL FREIGHT RATES FALL FLAT TO SOFT ON OVERSUPPLY, WEAK DEMAND - VISTAAR SINGAPROE
COALspot.com - The BDI continued its fall 10th August.
This week all segments were down including BDI down by 9.15 pct closing at 774 points .The ...
Saturday, 11 August 12
INDONESIAN COAL REFERENCE PRICE HAS LOST 27.78 PERCENT YOY
COALspot.com - Indonesian HBA fell again in August.
The monthly coal reference price for coal sales this month fell 3.32 percent. HBA fell ...
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Showing 4616 to 4620 news of total 6871 |
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- Kideco Jaya Agung - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Australian Coal Association
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Vizag Seaport Private Limited - India
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- The University of Queensland
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- MS Steel International - UAE
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
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