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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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Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
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- Wilmar Investment Holdings
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- India Bulls Power Limited - India
- Planning Commission, India
- Economic Council, Georgia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- London Commodity Brokers - England
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
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