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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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Tuesday, 08 March 22
THE HIGH COST OF INDONESIA’S DOWNSTREAM COAL PROJECTS IS UNDERESTIMATED - IEEFA
Three Indonesian ministries have come up with a DME purchase price of US$378/tonne fixed for 20 years compared to IEEFA’s US$601/tonne estima ...
Wednesday, 02 March 22
SHIPPING MARKET INSIGHT - INTERMODAL
The escalating confrontation between Russia and Ukraine has the potential to disrupt global order and set the world back a few decades. While count ...
Tuesday, 22 February 22
THE DRY BULK MARKET HAS MOVED ON A POSITIVE TRACK - ALLIED
The dry bulk market has moved on a positive track as of the past couple of weeks or so. Following the typical softening in freight conditions durin ...
Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
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- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Wilmar Investment Holdings
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- PTC India Limited - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Planning Commission, India
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
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