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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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Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
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- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Australian Coal Association
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Indika Energy - Indonesia
- ICICI Bank Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
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