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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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Wednesday, 02 February 22
MARKET INSIGHT - INTERMODAL
Oil prices have rallied to the highest level since October 2014 breaking above $90/bbl recently. November 2014 was the point when OPEC unleashed pr ...
Monday, 31 January 22
HOW INDONESIA'S COAL EXPORT BAN COULD IMPACT INDIA - IEEFA
What does it mean for power generation and energy security?
Not long ago, India faced coal shortages due to a decline in domestic co ...
Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
Plan to substitute Indonesia’s LPG imports with dimethyl ether may be hard to realize due to conflicting business interests
In ...
Sunday, 30 January 22
ENDGAME FOR NEW COAL POWER PROJECTS? - IEEFA INDIA
Retired coal units must be replaced only by assets that can provide grid flexibility
Reportedly, an expert committee appointed by th ...
Thursday, 27 January 22
2022 - A YEAR OF REBALANCING FOR METALS AND MINING - WOOD MACKENZIE
If 2021 was the year of rebound for metals and mining (M&M) commodities, then 2022 is shaping as the year of rebalance, says Wood Mackenzie, a ...
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- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Grasim Industreis Ltd - India
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
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