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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.
The Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Wednesday, 20 October 21
CHINA COAL HITS RECORD HIGH AMID TIGHT SUPPLIES - REUTERS
China coal prices hit a record high on Tuesday buoyed by a widening power crunch and cold weather despite Beijing’s efforts to bolster supply ...
Tuesday, 19 October 21
SPONGE IRON SECTOR MIGHT REPORT NEGATIVE GROWTH DUE TO COAL CRISIS: SIMA - PTI
The domestic sponge iron industry might report a negative growth in the ongoing December quarter “if the shortage of coal is allowed to conti ...
Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants ...
Saturday, 16 October 21
SOLAR INSTALLATION SURGE PUTS INDIA ON TRACK TO CAP COAL-FIRED POWER AS EARLY AS 2024 - IEEFA
Recent increase in solar power installations could push coal to peak sooner than expected
If India keeps installing solar capacity a ...
Saturday, 16 October 21
DESPITE HIGHER COAL PRICES, U.S. COAL RECOVERY LOOKS WEAK BY MOST MEASURES - IEEFA
U.S. coal sector is locked into a long-term sectoral decline
Coal prices have surged to the highest level in years in the U.S., and have soare ...
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- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Electricity Authority, New Zealand
- The University of Queensland
- Australian Coal Association
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
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