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