We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
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
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Friday, 26 October 12
DRY BULK MARKET FALLS ON WORRIES THAT RECENT RALLY WILL BE SHORTLIVED - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market retreated yesterday as a result of a plunge of the Capesize dry bulk carriers' segment, after their latest rally. As a result, ...
Tuesday, 23 October 12
INDONESIA SETS DMO FOR NEXT YEAR
COALspot.com - The Indonesian government has declared the quantity of coal to be supplied to domestic market in 2013 recently under DMO regulation. ...
Sunday, 21 October 12
BUMA HAS PRODUCED 25.0 MILLION TONS OF COAL YEAR TO DATE
COALspot.com - PT Delta Dunia Makmur Tbk., has removed 33.2 million bcm* (+5.5% YoY) of Overburden in September 2012 totaled while coal produc ...
Saturday, 20 October 12
SUPRAMAX FREIGHT EXPECTED TO BE FLAT - VISTAAR
COALspot.com - The shipping market continued to be quite active with quite lot of cargoes fixed for in the cape and panamax sector.
The BDI was ...
Thursday, 18 October 12
INDO-INDIA, LARGE ECO SUPRA FIXED AT USD 11000 - FEARNLEYS AS
Handy
Atlantic market remains quiet due to lack of cargoes and more supply of ships. Rates from Cont to East Med were around USD 14k and Black Sea ...
|
|
|
Showing 4531 to 4535 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Economic Council, Georgia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Australian Coal Association
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
|
| |
| |
|
