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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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Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
Saturday, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
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- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
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