RLL Container Report - 05 October 2016
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 05 October 2016
The difficulties of leasing container equipment in Russia..
The major container lessors have often complained about the difficulty of finding in Russia financially strong lessees, with whom they can conclude large, long-term lease contracts. Currently, Sibur Gas employs 1,500 of its own tank containers to transport liquefied petroleum gas (LPG). Sibur is to invest USD 70 million in acquitting additional gas tank containers and the necessary depot infrastructure to inspect, maintain and repair these sophisticated units.
The company would like to use more of these specialised gas tanks and is co-operating with clients on upgrades to their facilities for future intermodal operations. The gas giant is also investigating the possibility of using IMO gas tank containers to transport LPG to clients in China, where there is a break of gauge. It should be noted that the gas tank containers were purchased from two highly experienced gas tank manufacturers located in Russia.
Akron is planning to construct its own rail line to a new mine, some 37 km from the company’s main processing plant in the Murmansk Region. Once completed the lines will stretch a total of 50 km. The railway and rolling stock will be financed by Akron themselves and when completed it will replace an expensive truck fleet with a more efficient rail service. Akron decided to dispense with rail wagons and opted instead to acquire its own fleet of bulk containers.
Each year, EuroChem invests some USD 1 Billion from its profits in its fertiliser mines. Next year, the company will raise investments to USD 1.2 Billion in its fertiliser mines in the Volgograd and Perm regions. In addition, the group will invest Euro 660 million in a new ammonia plant at its existing facility in Kingisepp in the Leningrad Region. The plant will produce up to one million tons of ammonia per annum, much of which will be used to produce ammonium nitrate. According to the timetable, all three EuroChem plants are due to be fully on stream by 2018.
Since the start of the year, shipments of fertilisers on Russian Railways have risen by 4.1%. In May, records were broken as 4.2 million tons of fertiliser were transported on the rail network. To cope with this rise in exports, EuroChem urgently needs to construct a new terminal at the port of Ust-Luga, which is located a mere 50 km from its Kingisepp mine. The company may simply copy PhosAgro, which already has a base at Ust-Luga that uses a fleet of special bulk containers to store and then to load the fertiliser into bulk vessels. Rather than lease, PhosAgro simply placed an order with the Chinese manufacturers for a fleet of special containers and purchased the equipment outright. Most probably, EuroChem will adopt the same approach in order to avoid all the unnecessary hassle of leasing in specialist equipment.
The moral of the story: who needs to lease container equipment, when you are drowning in cash?
John Keir, Ross Learmont Ltd.
05 October 2016
Copyright ©, 2016, John Keir