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