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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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Tuesday, 30 October 12
NEW BUILDING ORDERING ACTIVITY KEEPS ON RETREATING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship owners have refrained from placing any new orders of vessels during the course of the past few days, according to shipbroker reports. According ...
Monday, 29 October 12
US COAL EXPORTS ARE EXPECTED TO REACH 125 MILLION TONS THIS YEAR - EIA
COALspot.com - US coal exports are expected to reach 125 million tons this year, surpassing the old record of about 113 million tons set in 1981, sa ...
Sunday, 28 October 12
SUB-BIT INDONESIA COAL SWAPS (FOB ) FOR DECEMBER 2012 DELIVERY STAYED FLAT D-D
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery flat on D-D but gained 0.38 percent on W-W on Friday, 26 October 2012, ...
Sunday, 28 October 12
INDONESIA TO INDIA SUPRAMAX FREIGHT MARKET FAIRLY STEADY - VISTAAR
COALspot.com - The Cape size sector continued to remain active with iron ore movement being steady. All other sectors were down.
The BDI was up b ...
Friday, 26 October 12
SHIPPING MARKETS HEADING FOR DIVISION AND MULTI-TIER WILL BECOME THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It seems that something is expected to be fundamentally different in the way that the shipping markets will be operating in the future, according to ...
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Showing 4526 to 4530 news of total 6871 |
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- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Simpson Spence & Young - Indonesia
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Altura Mining Limited, Indonesia
- Australian Coal Association
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
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