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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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Saturday, 01 August 20
SHIP SHAPE - OUCH: FIS
Thursday afternoon saw a report that US GDP in Q2 shrank by 32.9%. Now this may have beaten expectations, but it’s a bit like saying that you ...
Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
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- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
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- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
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- GN Power Mariveles Coal Plant, Philippines
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- Chamber of Mines of South Africa
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- Indogreen Group - Indonesia
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- The University of Queensland
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
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