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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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- IEA Clean Coal Centre - UK
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- The University of Queensland
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Central Electricity Authority - India
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Binh Thuan Hamico - Vietnam
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
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