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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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Wednesday, 25 November 20
MARKET INSIGHT - INTERMODAL
Over 90% of the world’s goods are transported by sea. LPG is a clean, energy efficient and portable fuel that is being marketed at an afforda ...
Friday, 20 November 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 ...
Thursday, 19 November 20
MARKET INSIGHT - INTERMODAL
As we are moving towards the end of the year, the overall deal landscape of the dry bulk sector corresponding to the second half of 2020 (up to dat ...
Tuesday, 17 November 20
COAL SQUEEZE INTENSIFIES - BALTIC EXCHANGE
The message from the top is clear: cut out coal. While the regulatory pressure has been evident for some time, the race to banish the black stuff s ...
Tuesday, 17 November 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 128.72 points Monday, up 0.35 percent week on week.
The index, released by China ...
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- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
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- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
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- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
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- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
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- Tata Chemicals Ltd - India
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- Cement Manufacturers Association - India
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- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
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- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
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- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
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- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
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- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
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- Indonesian Coal Mining Association
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- Semirara Mining Corp, Philippines
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- Siam City Cement PLC, Thailand
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- Romanian Commodities Exchange
- Bhushan Steel Limited - India
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- The State Trading Corporation of India Ltd
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- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
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- Energy Development Corp, Philippines
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- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- The University of Queensland
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
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- Kapuas Tunggal Persada - Indonesia
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- Simpson Spence & Young - Indonesia
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- Alfred C Toepfer International GmbH - Germany
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- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
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