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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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Sunday, 21 August 22
COAL-RICH POLAND FACES WINTER OF ENERGY DISCONTENT - DW
Poland uses 10 million tons of coal a year to heat households — a whopping 87% of all coal consumed in EU homes in 2019, according to the War ...
Saturday, 20 August 22
KOSPO TO IMPORT 240000 MT OF MIN 4400 KCAL/KG NCV STEAM COAL FOR OCTOBER;LOADING FROM RUSSIAN PORTS NOT ALLOWED
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 240,000 MT of min 4,400kcal/kg to max. 4,999 kcal/kg NC ...
Wednesday, 17 August 22
INDIAN COMPANIES SWAPPING DOLLAR FOR ASIAN CURRENCIES TO BUY RUSSIAN COAL - REUTERS
Indian companies are using Asian currencies more often to pay for Russian coal imports, according to customs documents and industry sources, avoidi ...
Wednesday, 17 August 22
LNG: MAJOR INVESTMENT AND EXPANSION PHASE, DOUBLING OF LIQUEFACTION CAPACITY BY 2028 PROJECTED - CLARKSONS
Clarksons Research have released the latest version of their long standing annual review, LNG Trade & Transport, on to Shipping Intelligence Ne ...
Wednesday, 17 August 22
UNAFFORDABLE LNG PRICES UNDERMINE RAPID DEMAND GROWTH FORECASTS IN KEY ASIAN MARKETS - IEEFA
Sustained high prices may accelerate downward pressures on Asian LNG demand, clouding long-term industry outlooks
The global liquefi ...
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- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- PTC India Limited - India
- The University of Queensland
- ICICI Bank Limited - India
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Kepco SPC Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
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