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Wednesday, 20 October 21
MARKET INSIGHT - INTERMODAL
 IMO 2020, Ballast Water Treatment regulations, Green Recycling, GHG emissions, EEXI, CII, ETS, Fit for 55, Carbon price/levy, the Poseidon Principles are just a handful pieces of evidence that the environmental regulations are not only knocking on the door, but are already inside the shipping house and with the intention to stay for good.
Ship operators and managers, charterers, ship financiers must take good consideration of all the above before making any operational and investment decision; including placing an order for a new-building vessel, which has become the most complex decision to make, given all the new regulations and technologies coming up.
In this radically changing environment, ship financiers need to assist the industry to bear the burden of the enormous cost of the new regulations/technologies and in general the setting up of the new greener landscape. So far, and while claiming that they will incentivize international shipping’s decarbonization, the focus in the immediate future is to finance solely modern/ecofriendly vessels, while older vessels’ access to financing which would need it the most for their environmentally upgrade is constrained by leading banks and left to alternative financing. This bifurcation in lending constitutes an obstacle for ships that don’t already have green credentials to take significant investment steps towards the energy transition requirements.
Obviously, banks are afraid of being left with portfolios of assets that in 3-4 years’ time have a minimum value (being non green assets). On top of this, there is the concern that a two-tier assets market might develop when the new regulations kick in. The one tier being this of the greener ships and the second one being the tier with the older, non-eco ones that may be employed at a discount. This places another risk factor for the banks. The risk of their financing projects not being profitable anymore. In this context, older ships seem to be left with the operational choice of reducing engine power and thus lower speeds as a primary measure to be “emissions compliant”. While the choice split on the speed level between the shipowner and the charterer will largely depend on the prevailing freight market structure i.e. voyages or timecharters that older vessels will be opted to be deployed under, the sure thing is that they will all try to take advantage of it and negotiate the fixing rates.
Will this be the case? Will we have another scrubber – non scrubber dilemma going forward? Will the new regulations, emissions mitigation costs via carbon prices / potential fuel levies, limited financing options (or expensive options through alternative financing) and lesser charter rates increase scrapping considerations in 2-3 years time, given that approx. 23% of the combined bulk tankers and containers fleet is above 15 years of age? Does the market have the luxury of losing even a fraction of this via scrapping considering the freight market upcycle across most shipping sectors leads to increased deadweight requirements? Let’s just have a look at what’s happening nowadays due to elevated port congestion, which has tied up a significant share of the dry bulk and containers fleet creating market inefficiencies that have exercised strong upward pressures on freight rates with container rates at record high levels and dry bulk freight rates at the highest in 13 years.
Therefore, a further fleet supply squeeze creates good chances that younger vessels will benefit from a charter premium compared to their older peers. However, this that does not mean that older vessels will become obsolete. This is something that the banks need to realise and start supporting their clients when it comes to ‘’older’’ vessels’ financings. It goes without saying that the whole shipping value chain needs to adjust to the new greener environment regime. The banks need to support this new and highly expensive venture of their clients not just by not financing older vessels, but also providing real, monetary incentives that will have tangible and meaningful effect to their daily operating costs.
By George Laios,
Deputy CEO
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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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 ...
Wednesday, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
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- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Australian Coal Association
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- VISA Power Limited - India
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