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Thursday, 13 September 12
FUEL EFFICIENT SHIPS MAY BE MORE EXPENSIVE, BUT THEY MAKE FINANCIAL SENSE SAYS ANALYSIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
 The latest trend in shipbuilding is the so called "Eco" ship, i.e. ships which offer much better fuel consumption and are more cost-effective in that sense. On the plus side, they help ship owners who order meet the latest regulations on shipping emissions, which are becoming ever so demanding. But, these vessels come at a heftier price tag, as much as 25% premium over regular ones. So one has to wonder, if the ship owners will his money back?
According to a relative analysis by Bimco's chief shipping analyst Peter Sand, this premium is financially and commercially viable. According to Sand, "our calculations show that, should you choose to invest in an ECO MR2-tanker, you could pay up to 25% more for your vessel before settling for a non-ECO MR2-tanker”. BIMCO has been looking at the basic economics of this development and can conclude that a fairly large premium can be paid on newbuildings to operate ECO ships instead of traditional ships. The calculations that are based on our assumptions, disclose that a 15% savings on fuel, potentially enables the owner of the ECO ship to charge extra up to the amount that is saved in fuel – which is USD 2,197 more per day than what a regular vessel can ever get obtain. The extra income means that a ship-owner can pay up to USD 8.31 million more for an ECO ship, for the investment to be equally good or better off as compared to a standard tanker. That is a premium of 25% when the standard vessel is priced at USD 33 million" he said.
Peter Sand also mentioned that "in the same way and based on the same fuel consumption and fuel prices assumptions, a ship-owner can pay up to USD 5.5 million more for an ECO ship for every 10% of fuel savings – or 17% more when a standard vessel is priced at USD 33 million. An obtainable premium to the market-given time charter rate (USD per day), where the charterer pays the fuel, is implied to be equal to an obtainable cost deduction on a market-given voyage charter rate (USD per tons) where the owner pays for the fuel".
So, what happens when one factors in the effect of fuel prices? "If the bunker prices go up the fuel-savings premium increases, making investments in ECO ships more viable. For each increase of USD 100 per tons in bunker prices the premium goes up by USD 338 per day, improving the net present value (NVP) of the investment by USD 1.3 million. A change to the fuel price tends to affect time-charter rates directly, but we fix the rate at USD 12,750 per day in the following calculations, which is the latest 1-year time-charter rate for a 47-48k products tanker according to CRSL. If the bunker price stays on the current level of USD 651 per ton the fuel-savings premium will not be high enough to make investment in an ECO ship profitable for a ship-owner; even the psychological barrier of USD 1,000 per ton will not make the investment sustainable with a negative net present value of USD 0.7 million. The bunker price has to exceed USD 1,060 per tons to make a new ECO ship an investment, with a positive NPV, if the ECO ship is priced at USD 33 million. In other words, bunker prices would have to increase by two-thirds ceteris paribus to make the investment viable under the circumstance of a fixed time-charter rate and OPEX level going forward" said the report.
It continued by mentioning that "at the current 1 year time-charter rate of 12,750 USD/day, a standard vessel does not meet its cash-breakeven rate making the investment unprofitable with an NPV loss of USD 13.5 million – more than the initial equity outlay. Even if we were able to secure the ECO ship at a cost of USD 33 million the investment will still be unprofitable, despite being able to charge a fuel-savings premium of 2,197 USD on top of the time-charter rate, making an NPV loss of USD 5.2 million.
The cash-breakeven cost for a vessel priced at USD 33 million is USD 13,928 a day covering the daily operating and financial expenses, but not return to equity, which explains why the time-charter rate plus the fuel-savings premium is not enough to make the investment in an ECO ship profitable in the current environment.
The effect of new-building prices
As stated above the current time-charter rates at a fixed level for the next 20 years are not high enough to sustain investments in new vessels at present new-building prices.
Returning to the benchmark case of 15% fuel savings and time-charter rates of 12,750 USD/day for a standard vessel, an ECO ship must not cost more than USD 27.8 million to be a profitable investment for a ship-owner. Comparably a standard vessel must cost as little as USD 19.5 million to be profitable in today’s market. “The current newbuilding prices reflect some optimism in the shipping industry. Higher freight rates are expected to be part of not too distant future. From our calculations two results are striking; Firstly, newbuilding prices are not as closely related to the present market condition as they normally are – and secondly, ECO ships seem to be the best profitable choice for the future fleet” adds Peter Sand.
The effect of time-charter rates
"Instead of changing the new-building prices, we now examine how high the time-charter rates must go before the purchase becomes profitable. For a standard vessel priced at USD 33 million, time-charter rates must be as high as USD 16,328 per day for the purchase to be sustainable – but rates have not been this high since mid-2009. If the ECO ship costs USD 33 million, the ship also needs to make USD 16,328 per day before the purchase is profitable; but a portion of the rate reflects the fuel-savings premium. By deducting the premium of USD 2,197 per day, we can compare the rate to the historical values observed by a standard vessel. This means that the base rate needs to be USD 16,328-2,197=14,131 per day before an ECO ship becomes a profitable investment. By looking at historical freight rates, this is achievable. The 10-year average for 2003-2012 is USD 19,214 per day for a 1-year TC for a 47,000-48,000 DWT products tanker. It should be noted that we have assumed that the whole advantage of the investment would go to the ship owner" the report concluded.
Source: Nikos Roussanoglou, Hellenic Shipping
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Thursday, 01 November 12
SOUTH KOREAN POWER UTILITY EWP TO PURCHASE 670,000 MT OF COAL FOR JAN - FEB 2013 DELIVERY
COALspot.com: Korea East-West Power Co. Ltd. on behalf of Korea South-East Power Co. Ltd., Korea Southern Power Co. Ltd., Korea Midland Power Co. Lt ...
Thursday, 01 November 12
KOMIPO LOOKING FOR 440,000 MT OF 4600 KCAL/KG NAR COAL FOR BORYEONG POWER PLANT
COALspot.com - Korea Midland Power Co. Ltd.(KOMIPO) is inviting bids from coal producers, marketing companies or traders to supply of 440,000 Metric ...
Thursday, 01 November 12
CAPESIZE RATES FALL, DRY BULK MARKET RETREATS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It was another lackluster session yesterday in the dry bulk markets, with the industry's benchmark, the BDI (Baltic Dry Index) retreating by 1.63 p ...
Thursday, 01 November 12
HANDY : WCI-CHINA RATES ARE AT AROUND USD 5,000 AND ECI-CHINA AROUND USD 4000 - FEARNLEYS AS
Handy
The Atlantic market remains quiet due to a lack of cargoes and an increased supply of ships. Rates from the Continent to east Med were around ...
Tuesday, 30 October 12
COAL PRODUCTION TO RISE BY FIVE PERCENT IN 2013 - TEMPO INTERACTIVE
TEMPO Interactive reported that, Indonesian Coal Mining Association (APBI) chairman Bob Kamandanu has estimated that Indonesian coal production will ...
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- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Marubeni Corporation - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- White Energy Company Limited
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
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