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Thursday, 30 June 22
WHY ARE LNG SHIPPING STOCKS RESILIENT? - DREWRY
LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caused by the Russia-Ukraine conflict. Drewry’s LNG shipping equity index increased by 12.7% YTD as of 28 June 2022, outperforming S&P 500 which declined by 19.8% during the same period. Golar LNG stock price surged the most (up 87.9%), while Flex LNG increased by 24.8% and Nakilat by +18.2.%. LNG stocks have mainly benefited from the rising European LNG demand as the region switches away from Russian natural gas. We explore the reasons for the resilience of LNG shipping stocks amid the sell-off in the broader equity market and whether investors should consider adding LNG stocks to their portfolios.
FSRU focused stocks are key beneficiaries
Companies with FSRU exposure have particularly benefited as European countries are opting for FSRUs over their land-based counterparts. FSRU terminals can be installed in one-two years compared to three years for LNG import terminals. Golar LNG’s share price has profited from its exposure to FSRU, the company’s stake in New Fortress Energy (NFE – a leading FSRU player) and high crude oil prices. Amid a buoyant FSRU market, Golar LNG has entered into a contract with Snam to sell its 19-year-old LNG vessel Golar Arctic for USD 287.9mn (EUR 269mn) as an FSRU after conversion. The company has also signed an agreement with Snam to sell Golar Tundra FSRU for USD 350mn. NFE, which has a fleet of seven FSRUs and in which Golar LNG has a stake of 6%, has gained 68.5% YTD.
FSRUs are in high demand with Europe seeking at least 16 FSRUs to replace most of the Russian gas imports. We believe countries like Germany, France and Italy are willing to pay a high premium to acquire the assets, but with only 50 FSRUs (as of March 2022) in operation globally, the demand for FSRU providers has strengthened.
Buoyant market drives new charter wins
The upcoming EEXI and CII regulations and charters’ desire to secure LNG ships amid the geopolitical tensions are other factors driving LNG shipping demand. Flex LNG has won fixed charter for 12 vessels since March 2021, suggesting strong demand for its young fleet, with three of these charter wins in June 2022. Latest charter wins announced in June 2022 extend between seven and ten years, longer than most of the company’s existing charters and suggest increasing preference of charterers to go for longer term charter. Nakilat announced during its 4Q21 results that it has won the term-charter for all the four newbuild vessels delivered between 2Q20 and 1Q22.
LNG shipping prospects
The Russia-Ukraine war has brought the energy sector to the center stage with more focus on the LNG industry as Europe tries to wean away from Russian LNG imports and is ramping up its LNG import facilities by investing in FSRUs. As the coming years should see more FID for LNG liquefaction projects, leading to higher demand for LNG ships, we expect spot and long-term LNG shipping rates to firm up. LNG shipping companies stand to benefit from this high charter rate environment. Expectations of tight LNG supply and European geopolitical tensions is accelerating sale and purchase agreements for LNG and in turn, FIDs for new LNG projects. Charterers are preferring long-term charter to cover volatility in a tight supply market. While new order momentum is high in 2022 YTD with close to 100 LNG ship orders, we expect LNG shipping rates to continue to rise as most of the new orders have firm charter.
Upcoming EEXI and CII regulations to support LNG freight rates
As EEXI and CII regulations come into effect from 1 January 2023, we expect an increase in conversion activity of older stream turbine vessels into FSU for import projects as we believe these vessels will be more impacted by the new regulations. While these vessels will need to reduce their speed to comply with the regulations, the very old vessels will become unviable and will exit the fleet, affecting capacity and consequently supporting higher freight rates.
More borrowing capacity with a healthier balance sheet
LNG shipping companies have a healthier balance sheet at the end of 1Q22 compared to 4Q20. Furthermore, an increase in LNG vessel prices since mid-2020 indicates higher borrowings potential which can be used to acquire new vessels. Given the strong prospects, it is comparatively easier now to win a long-term charter compared to the previous two years.
Conclusion
We expect earnings of LNG shipping companies to benefit from positive LNG shipping prospects in the coming quarters. Given the tight LNG shipping prospects and LNG stocks’ resilience thus far, we believe investors can consider adding LNG shipping stocks to their portfolio. We prefer companies with solid revenues, young fleet and healthy balance sheet.
Source: Drewry
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Friday, 02 September 22
INDONESIA COAL PRICE REFERENCE SLIPS SLIGHTLY IN SEPTEMBER 2022
COALspot.com: Indonesian Coal Price Reference for September delivery drops 0.74 per cent month on month.
The Indonesian Coal Price R ...
Friday, 02 September 22
ABM INVESTAMA BUYS 30% GEMS SHARES FOR US$ 420 MILLION
PT ABM Investama Tbk through its indirect subsidiary, bought a 30% stake in the PT Golden Energy Mines Tbk for US$ 420 million or around Rp 6.2 tri ...
Wednesday, 31 August 22
MARKET INSIGHT - INTERMODAL
Scorching temperatures and extremely dry conditions during the Northern hemisphere summer have been drying crops. Yield prospects have subsided in ...
Tuesday, 23 August 22
HIGH COAL PRICES COULD BOOST INDONESIA'S ENERGY TRANSITION - IEEFA
Global coal prices have reached an all-time high as countries stop purchasing Russian coal amidst the Russia-Ukraine conflict. Indonesian coal comp ...
Tuesday, 23 August 22
A COMBINED US$6.8-BILLION CASH BALANCE OF INDONESIAN COAL COMPANIES COULD PROVIDE FOR TIMELY INVESTMENTS IN GREEN TRANSITION - IEEFA
A combined US$6.8-billion cash balance of Indonesian coal companies could provide for timely investments in green transition
The opp ...
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- Bahari Cakrawala Sebuku - Indonesia
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Leighton Contractors Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- The University of Queensland
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- PTC India Limited - India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
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