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Wednesday, 13 July 22
MARKET INSIGHT - INTERMODAL
 Taking the previous market insight a step further, market sentiment remains bullish regarding the overall ROI of scrubbers, facing tailwinds from a surprisingly favorable Hi-5 spread. Under a blurred setting regarding the direction and efficiency of alternative fuels and the current geopolitical disruptions, owners tend to adopt a medium-term approach to the evaluation of their investment towards decarbonization, rather than a long-term which might be overturned.
Recent studies have shown that running on HSFO and on a scrubber produces way lower emissions than running on LSMGO, further confirming the viability of a scrubber investment. Currently, owners who will drydock their vessels soon are increasingly considering investing in pollution abatement technology, in return for the benefits from the expected savings in the bunkering costs.
Coming down to the decision-making, the choice of scrubber type is a key factor that shapes the fitting cost but will mostly affect future savings and compliance with changing regulations. While most vessels carry open-loop scrubbers, many vessels fitted now opt for hybrid types, which offer increased flexibility for operation in all areas, regardless of ECA’s constraining rules or seawater alkalinity. Technological investments have a special mechanism of assessment, therefore, payback period, level of risk, tax prospects and expected inflation should be considered. The main criteria regarding the justification of a scrubber investment should be the ROI (including CAPEX & OPEX), the space occupied, and the weight, with horizontal scrubbers weighting less and covering less space compared to vertical ones, thus, minimizing the impact on a vessel’s cargo-carrying capacity and its profitability. Due to the funding difference of the technology implementation, the terms of inflows (fuel savings) and outflows (CAPEX & OPEX) should be identified, while the determining factor will be the maximum payback period.
Currently, owners who have already invested in scrubbers are enjoying a high ROI, while benefiting from more than $500/t Hi-5 spreads. For instance, in Singapore it was assessed at an all-time high of $569.50/t on July 5th, creating, therefore, the perfect scenario for scrubber-equipped ships. In Fujairah, the set-up is pretty much similar with the spread fluctuating close to the $500/t range. While HSFO markets in Asia have been weakening on the back of sanctions on Urals crude in Europe and the US, VLSFO markets are seeing a tight supply as refineries have been utilizing sweeter crude to maximize gasoline production to meet the demand for the peak driving season in the US and due to the expanded regional turnaround and strong gasoline cracks.
At the moment, retrofitting times vary between 30 and 50 days, which is important to consider under the current market conditions. According to our data, retrofits now take place at a slower pace, while during 1H of 2022 only 3.7% of newbuilt vessels are scrubber fitted, compared to 13.9% during 1H of 2021. Since investments in technology are capital intensive, owners tend to keep a more conservative stance and ensure a balance in their fleets, until clarity is given on what will be the most cost-efficient and dominant compliant method.
By Chara Georgousi,
Research Analyst
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.
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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Planning Commission, India
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Australian Coal Association
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- The Treasury - Australian Government
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- The University of Queensland
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
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