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Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
 Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weakness in rates may weigh on the financial profile of PT Buana Lintas Lautan Tbk (BULL, B+/Negative), which has around 15% of its fleet capacity earning revenue based on international spot rates.
The Baltic Dirty Tanker Index, which is made up from 12 Baltic international routes and mainly for crude oil shipping, has declined to below 500 points, from an average of 1,200 in March-April 2020, and is at its lowest since 2009. The index averaged 855 points in 2019 and around 770 points since 2009. Similarly, the Baltic Clean Tanker Index for refined fuel shipping has fallen to below 400 points from an average of around 1,305 points in April 2020.
The sharp fall in rates follows lower demand for global oil transportation with the OPEC+ alliance announcing in April 2020 an agreement to cut output by 9.7 million barrels per day (mbpd), or 10% of global output, from May 1. The group agreed in June to extend the production cut by one month through the end of July. The cut in output also resulted in a sharp rally in crude oil prices, with Brent price increasing to over USD40 per barrel (bbl) from around USD20/bbl near mid-April. Higher oil prices reduced the demand for floating storage and such tankers were freed, increasing spare capacity and pressuring rates.
Tanker demand has declined sharply since March-April, when Saudi Arabia increased its oil output ahead of the OPEC+ deal to cut production. The effect of increased oil output on tanker rates was compounded by the sharp fall in oil prices, which caused the futures curve to be in contango and incentivised oil storage on land and in tankers.
Demand for tankers is likely to improve from August with a reduction in the OPEC+ cuts to 7.7mbpd until the end of the 2020 and further to 5.8mbpd from January 2021. However, the output cut will continue weighing on tanker rates and improvement in rates is likely to be a gradual process.
Indonesian tanker operators PT Soechi Lines Tbk (B/Stable) and BULL benefit from largely stable rates in the domestic market, which is protected from foreign competition by cabotage laws and dominated by state-owned oil major PT Pertamina (Persero) (BBB/Stable) which is the main revenue driver.
However, BULL’s exposure to international rate volatility has increased this year. BULL had 24 of its 25 ships, or 93% of its fleet capacity, under standard time-charter contracts as of end-2019 while one tanker was part of a pool of ships managed by a pool operator and earned revenue based on international spot rates. The share of BULL’s fleet capacity managed by the pool operator has increased to 14% by end-2Q20 with three out of 33 ships being part of the pool. Additionally, BULL has two ships constituting 10% of its capacity under time-charter contracts with a base rate and upside if international spot rates are higher.
The company said it is seeking to switch the fleet under the pool operator to short-term time charter contracts of three to six months from September 2020 to limit the impact of the fall in tanker rates. Nonetheless, the Negative Outlook on BULL’s rating reflects risks to its financial profile from weak international rates, apart from sustained spending on fleet expansion. We estimate FFO gross leverage to increase to 3.8x in 2021, from 2.9x in 2020 (2019: 4.3x), due to lower international rates and EBITDA. We also assume BULL acquires five more ships for USD100 million in 2021.
Source: Fitch Ratings
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Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
Wednesday, 29 July 20
2019 U.S. COAL PRODUCTION FALLS TO ITS LOWEST LEVEL SINCE 1978 - EIA
In 2019, U.S. coal production totaled 706 million short tons (MMst), a 7% decrease from the 756 MMst mined in 2018. Last year’s production wa ...
Wednesday, 29 July 20
MARKET INSIGHT - INTERMODAL
The dry bulk sector is beginning to recover from reduced SnP activity recorded in the first quarter of 2020. The table below illustrates that appro ...
Tuesday, 28 July 20
DEUTSCHE BANK TO END GLOBAL BUSINESS ACTIVITIES IN COAL MINING BY 2025 - REUTERS
Deutsche Bank, in a revamp of its policies for fossil fuels, said on Monday that it would end business activities worldwide related to coal mining ...
Monday, 27 July 20
IEEFA ENERGY FINANCE CONFERENCE 2020: COAL, LNG, PETROCHEMICAL SECTORS FACE POOR OUTLOOK AND UPHILL BATTLE FOR INVESTORS
Fossil fuel industries were becoming less financially attractive even before the global coronavirus pandemic
Three major fossil fuel ...
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- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
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