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