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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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Thursday, 30 June 22
WHY ARE LNG SHIPPING STOCKS RESILIENT? - DREWRY
LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caus ...
Thursday, 30 June 22
SPOT AUSTRALIAN THERMAL COAL HAS SURGED, BUT CONTRACT PRICE IS KEY - REUTERS
The spot price of Australian thermal coal is higher than that of coking coal, an unprecedented situation that highlights just how the global market ...
Thursday, 30 June 22
SHANXI PROVINCE RAISES ANNUAL COAL OUTPUT TO 1.3 BILLION TONS TO ENSURE CHINA’S ENERGY SUPPLY - GLOBAL TIMES
North China’s Shanxi Province, a major coal-producing region, recently announced a move to increase its annual coal production output by 107 ...
Thursday, 30 June 22
DIVERGENCE BETWEEN HIGH- AND LOW-GRADE THERMAL COAL PRICES IN APAC TO NARROW - FITCH RATINGS
Prices between high- and low-grade thermal coal in Asia-Pacific (APAC) have diverged since late March 2022, but Fitch Ratings expects the gap to na ...
Thursday, 30 June 22
INVESTMENT IN GLOBAL COAL SUPPLY CHAIN TO HIT $115 BN IN 2022, LED BY CHINA AND INDIA - BUSINESS LINE
At over $80 billion, China and India are anticipated to make up the bulk of global coal investment in 2022, says IEA.
The investment ...
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- The Treasury - Australian Government
- White Energy Company Limited
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Central Electricity Authority - India
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- MS Steel International - UAE
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
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