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