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Friday, 13 November 20
SHIPPING OUTLOOK TURNS STABLE ON EBITDA GROWTH, IMPROVING SUPPLY-DEMAND BALANCE - MOODY’S
 Outlook revised to stable from negative.
The global shipping industry is on course to perform better overall than we had previously expected this year. We expect the aggregate EBITDA of the shipping companies we rate globally to grow by 3%-5% in 2021, driven by a recovery in the dry bulk segment from pandemic lows and the continuance of good market fundamentals for container shipping. However, this is tempered by a likely decline in EBITDA in the tanker segment next year because of tough comparisons with record charter rates in the first half of 2020. The industry’s overall supply-demand balance is set to improve in 2021, which is the other main reason for the outlook change. However, risks remain. A tenuous global economic recovery has taken hold but ongoing pandemic fears and a resurgence in coronavirus infections in some major economies could hinder a recovery in demand for shipping services in 2021. Our outlook for the global shipping industry had been negative since March 2020.
Limited supply of new vessels and capacity management should act as a cushion to adverse market conditions.
Order books for all three shipping segments remain at record low levels in relation to their total fleets. As Exhibit 2 shows, even absent a real recovery or demand contracting moderately, the different segments would see limited growth in new capacity. In the container shipping segment, carriers could resume cancellations of sailings to reduce capacity to match demand. However, the tanker and dry bulk markets will be more sensitive to changes in demand during 2021 because they are much more fragmented than the global container market where capacity is partly organised through alliances.
Our view for the container shipping segment has changed to stable from negative. Following very disciplined capacity management by carriers, low bunker prices and increasing freight rates as demand recovered in the second half of 2020, the container shipping industry will record one of its strongest years since 2010. With supply and demand likely to be in balance given the very limited order book for new vessels, we expect a stable operating environment in 2021. Even if the global economic recovery takes longer to materialise, given the rising infections in Europe and the US, carriers’ capacity management should continue to keep freight rates broadly stable.
Our view for the dry bulk segment has changed to stable from negative. This is anchored in our expectations that the trough for dry bulk shipping companies likely happened during the second quarter of 2020 and that the market environment should gradually improve over the next 12-18 months. The recovery in key dry-bulk commodities has been more or less driven by China, where import volumes of iron ore were 11% higher in the year to date to August than in the same period in 2019. The supplydemand balance is also set to improve. Assuming the global economy recovers in 2021, we foresee dry bulk demand growing by 3%-5% versus supply growth ranging from 0.5% to 2%, depending on the level of scrapping activity and order delays/cancellations. Still, downside risks are certainly evident, including protracted lockdowns that would curb demand.
Our view for the tanker segment has changed to negative from stable. Tanker operators had a very strong first half of the year as the mix of a sudden collapse in oil prices and maintained production resulted in high demand for floating storage, particularly for very large crude carriers (VLCCs). As a result, charter rates reached record highs in the March to May period this year, but have weakened since with recent VLCC rates around half of the peak levels earlier this year. A substantial part of the fleet remains in floating storage or idle, a temporary effect that is likely to reverse, although a reversal may also result in higher scrapping. While oil demand continues to recover, fleet order books remain manageable and charter rates may seasonally rise in the fourth quarter of 2020, we believe that EBITDA in this shipping segment will contract in 2021 as the as the exceptional Q2 environment is unlikely to be repeated.
What could change the outlook. We would consider revising the outlook to positive if both the oversupply of vessels declines materially and comparable year-over-year EBITDA growth appears likely to exceed 10%. We would consider changing the outlook to negative if we see signs that shipping supply growth will exceed demand growth by more than 2% or that comparable EBITDA will decline by more than 5% year over year
Since outlooks represent our forward-looking view on business conditions that factor into our ratings, a negative (positive) outlook suggests that negative (positive) rating actions are more likely on average. However, the industry outlook does not represent a sum of upgrades, downgrades or ratings under review, or an average of the rating outlooks of issuers in the industry, but rather our assessment of the main direction of business fundamentals within the overall industry.
Source: Moody’s
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Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
Wednesday, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
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- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Planning Commission, India
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Coastal Gujarat Power Limited - India
- Ministry of Mines - Canada
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- The University of Queensland
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Australian Coal Association
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- Minerals Council of Australia
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- PTC India Limited - India
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