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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, 10 July 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Friday, 10 July 20
GLOBAL SHIPPING EARNINGS FORECAST CUT AS SUPPLY SET TO OUTSTRIP DEMAND - MOODY'S
EBITDA forecast worsens, keeping outlook negative. We now expect the aggregate EBITDA of rated shipping companies to fall by around 16%-18% in 2020 ...
Wednesday, 08 July 20
MARKET INSIGHT - INTERMODAL
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear ...
Tuesday, 07 July 20
COAL INDIA WORKERS STRIKE CUTS OUTPUT BY 56%: OFFICIAL - REUTERS
A strike at Coal India Ltd cut production by 56% in the three days ending July 4 as workers oppose opening up coal mining to the private sector, a ...
Tuesday, 07 July 20
WHAT DOES THE PATHWAY TO A NET-ZERO ECONOMY LOOK LIKE FOR MINERS? - WOOD MACKENZIE
Wind, solar, electric vehicles, stationary storage and transmission are all central to achieving the Paris Agreement decarbonisation goals.
&nb ...
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- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
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- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
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- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
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- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
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- Meralco Power Generation, Philippines
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- Central Electricity Authority - India
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- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
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- Jaiprakash Power Ventures ltd
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
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- Bulk Trading Sa - Switzerland
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- Heidelberg Cement - Germany
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- Planning Commission, India
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- Economic Council, Georgia
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- Australian Commodity Traders Exchange
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- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
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- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
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- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
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- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
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- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
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- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
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- ICICI Bank Limited - India
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- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Ministry of Transport, Egypt
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- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
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- Medco Energi Mining Internasional
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