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.
|
|
Tuesday, 16 October 12
DRY BULK FREIGHT RATES COULD IMPROVE ON CHINESE STIMULUS AND WINTER CARGO DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO has given out its forecast for the next six weeks, in terms of freight rates for dry bulk carriers. According to them, Capesize TC Average rat ...
Monday, 15 October 12
IT'S STRICTLY COME CHARTERING - CLARKSON RESEARCH SERVICES
The charter market is a bit of a dance between ship owner and charterer: one leader, one follower; one step, two steps, turn... The dance is symbiot ...
Sunday, 14 October 12
SUB-BIT INDONESIA COAL AND CFR SOUTH CHINA COAL SWAPS: SOFT
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for December 2012 delivery lost 0.329 percent w- w but gained 0.248 percent d-d on Friday, 12 Oct ...
Sunday, 14 October 12
SUPRAMAX FREIGHT STEADY: PANAMAX FREIGHTS FIRM - VISTAAR
COALspot.com - The shipping market saw some hectic activity in the Cape and panamax sector and quite a lot of fixtures reported.
The BDI was up b ...
Friday, 12 October 12
HOW REAL IS THE THREAT OF PIRACY? - BIMCO
The threat of modern piracy remains serious, regardless of its seasonal variations and the fact that it is chiefly confined to the Indian Ocean, Gul ...
|
|
|
Showing 4536 to 4540 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- The University of Queensland
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- SMC Global Power, Philippines
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
|
| |
| |
|
