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Wednesday, 13 July 22
MARKET INSIGHT - INTERMODAL
 Taking the previous market insight a step further, market sentiment remains bullish regarding the overall ROI of scrubbers, facing tailwinds from a surprisingly favorable Hi-5 spread. Under a blurred setting regarding the direction and efficiency of alternative fuels and the current geopolitical disruptions, owners tend to adopt a medium-term approach to the evaluation of their investment towards decarbonization, rather than a long-term which might be overturned.
Recent studies have shown that running on HSFO and on a scrubber produces way lower emissions than running on LSMGO, further confirming the viability of a scrubber investment. Currently, owners who will drydock their vessels soon are increasingly considering investing in pollution abatement technology, in return for the benefits from the expected savings in the bunkering costs.
Coming down to the decision-making, the choice of scrubber type is a key factor that shapes the fitting cost but will mostly affect future savings and compliance with changing regulations. While most vessels carry open-loop scrubbers, many vessels fitted now opt for hybrid types, which offer increased flexibility for operation in all areas, regardless of ECA’s constraining rules or seawater alkalinity. Technological investments have a special mechanism of assessment, therefore, payback period, level of risk, tax prospects and expected inflation should be considered. The main criteria regarding the justification of a scrubber investment should be the ROI (including CAPEX & OPEX), the space occupied, and the weight, with horizontal scrubbers weighting less and covering less space compared to vertical ones, thus, minimizing the impact on a vessel’s cargo-carrying capacity and its profitability. Due to the funding difference of the technology implementation, the terms of inflows (fuel savings) and outflows (CAPEX & OPEX) should be identified, while the determining factor will be the maximum payback period.
Currently, owners who have already invested in scrubbers are enjoying a high ROI, while benefiting from more than $500/t Hi-5 spreads. For instance, in Singapore it was assessed at an all-time high of $569.50/t on July 5th, creating, therefore, the perfect scenario for scrubber-equipped ships. In Fujairah, the set-up is pretty much similar with the spread fluctuating close to the $500/t range. While HSFO markets in Asia have been weakening on the back of sanctions on Urals crude in Europe and the US, VLSFO markets are seeing a tight supply as refineries have been utilizing sweeter crude to maximize gasoline production to meet the demand for the peak driving season in the US and due to the expanded regional turnaround and strong gasoline cracks.
At the moment, retrofitting times vary between 30 and 50 days, which is important to consider under the current market conditions. According to our data, retrofits now take place at a slower pace, while during 1H of 2022 only 3.7% of newbuilt vessels are scrubber fitted, compared to 13.9% during 1H of 2021. Since investments in technology are capital intensive, owners tend to keep a more conservative stance and ensure a balance in their fleets, until clarity is given on what will be the most cost-efficient and dominant compliant method.
By Chara Georgousi,
Research Analyst
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, 29 June 22
LNG MARKET REMAINS TIGHT - INTERMODAL
LNG market remains tight currently, mainly driven by the US LNG outage from the recent fire in Freeport LNG terminal together with the recent fall ...
Wednesday, 29 June 22
CHINA'S NEW PLAN FOR RENEWABLE ENERGY DEVELOPMENT FOCUSES ON CONSUMPTION - FITCH RATINGS
China’s focus on consumption penetration for renewable energy development in its recently released 14th five-year plan – 2021 to 2025 & ...
Wednesday, 29 June 22
APAC CORPORATE SECTOR OUTLOOKS SHIFT AMID GLOBAL SHOCKS - FITCH RATINGS’
Fitch Ratings’ mid-2022 corporate sector outlook review revealed that the Asia-Pacific (APAC) region saw the largest number of sector outlook ...
Thursday, 16 June 22
MARKET INSIGHT - INTERMODAL
Picking up from my last insight in March, on the early days of the invasion, it's worth pointing out the way that the fast-paced working enviro ...
Saturday, 11 June 22
AIMTEK INTERNATIONAL CONFERENCE AND AWARDS
Press Release: The prestigious AIMTEK International Conference and Awards concluded successfully on June 7th, 2022 at Radisson Blu, Yas Island Abu ...
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- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Mjunction Services Limited - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Parry Sugars Refinery, India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Parliament of New Zealand
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- The University of Queensland
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Australian Coal Association
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Planning Commission, India
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