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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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Wednesday, 20 October 21
CHINA COAL HITS RECORD HIGH AMID TIGHT SUPPLIES - REUTERS
China coal prices hit a record high on Tuesday buoyed by a widening power crunch and cold weather despite Beijing’s efforts to bolster supply ...
Tuesday, 19 October 21
SPONGE IRON SECTOR MIGHT REPORT NEGATIVE GROWTH DUE TO COAL CRISIS: SIMA - PTI
The domestic sponge iron industry might report a negative growth in the ongoing December quarter “if the shortage of coal is allowed to conti ...
Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants ...
Saturday, 16 October 21
SOLAR INSTALLATION SURGE PUTS INDIA ON TRACK TO CAP COAL-FIRED POWER AS EARLY AS 2024 - IEEFA
Recent increase in solar power installations could push coal to peak sooner than expected
If India keeps installing solar capacity a ...
Saturday, 16 October 21
DESPITE HIGHER COAL PRICES, U.S. COAL RECOVERY LOOKS WEAK BY MOST MEASURES - IEEFA
U.S. coal sector is locked into a long-term sectoral decline
Coal prices have surged to the highest level in years in the U.S., and have soare ...
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- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
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