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Wednesday, 20 October 21
MARKET INSIGHT - INTERMODAL
 IMO 2020, Ballast Water Treatment regulations, Green Recycling, GHG emissions, EEXI, CII, ETS, Fit for 55, Carbon price/levy, the Poseidon Principles are just a handful pieces of evidence that the environmental regulations are not only knocking on the door, but are already inside the shipping house and with the intention to stay for good.
Ship operators and managers, charterers, ship financiers must take good consideration of all the above before making any operational and investment decision; including placing an order for a new-building vessel, which has become the most complex decision to make, given all the new regulations and technologies coming up.
In this radically changing environment, ship financiers need to assist the industry to bear the burden of the enormous cost of the new regulations/technologies and in general the setting up of the new greener landscape. So far, and while claiming that they will incentivize international shipping’s decarbonization, the focus in the immediate future is to finance solely modern/ecofriendly vessels, while older vessels’ access to financing which would need it the most for their environmentally upgrade is constrained by leading banks and left to alternative financing. This bifurcation in lending constitutes an obstacle for ships that don’t already have green credentials to take significant investment steps towards the energy transition requirements.
Obviously, banks are afraid of being left with portfolios of assets that in 3-4 years’ time have a minimum value (being non green assets). On top of this, there is the concern that a two-tier assets market might develop when the new regulations kick in. The one tier being this of the greener ships and the second one being the tier with the older, non-eco ones that may be employed at a discount. This places another risk factor for the banks. The risk of their financing projects not being profitable anymore. In this context, older ships seem to be left with the operational choice of reducing engine power and thus lower speeds as a primary measure to be “emissions compliant”. While the choice split on the speed level between the shipowner and the charterer will largely depend on the prevailing freight market structure i.e. voyages or timecharters that older vessels will be opted to be deployed under, the sure thing is that they will all try to take advantage of it and negotiate the fixing rates.
Will this be the case? Will we have another scrubber – non scrubber dilemma going forward? Will the new regulations, emissions mitigation costs via carbon prices / potential fuel levies, limited financing options (or expensive options through alternative financing) and lesser charter rates increase scrapping considerations in 2-3 years time, given that approx. 23% of the combined bulk tankers and containers fleet is above 15 years of age? Does the market have the luxury of losing even a fraction of this via scrapping considering the freight market upcycle across most shipping sectors leads to increased deadweight requirements? Let’s just have a look at what’s happening nowadays due to elevated port congestion, which has tied up a significant share of the dry bulk and containers fleet creating market inefficiencies that have exercised strong upward pressures on freight rates with container rates at record high levels and dry bulk freight rates at the highest in 13 years.
Therefore, a further fleet supply squeeze creates good chances that younger vessels will benefit from a charter premium compared to their older peers. However, this that does not mean that older vessels will become obsolete. This is something that the banks need to realise and start supporting their clients when it comes to ‘’older’’ vessels’ financings. It goes without saying that the whole shipping value chain needs to adjust to the new greener environment regime. The banks need to support this new and highly expensive venture of their clients not just by not financing older vessels, but also providing real, monetary incentives that will have tangible and meaningful effect to their daily operating costs.
By George Laios,
Deputy CEO
Compiled by:
Intermodal Research & Valuations
Analysts:
Yiannis Parganas
Tamara Apostolou
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.
The Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Monday, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
The shipping markets have been pulled further into wild markets of coal and other energy sources. Given how nebulous this sector is, it’s alw ...
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- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- The University of Queensland
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- McConnell Dowell - Australia
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- ICICI Bank Limited - India
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