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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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Tuesday, 26 April 22
INDIA'S COAL IMPORTS ARE SHIFTING, THERMAL MORE THAN COKING - REUTERS
India’s coal imports are starting to reflect shifting world trade and pricing dynamics in the wake of Russia’s invasion of neighbouring ...
Monday, 18 April 22
GERMAN COAL IMPORTERS EXPECT A BRIEF SPIKE IN PRICES ON EU BAN - REUTERS
A European Union embargo on Russian coal imports will push up prices in the short term before alternative supplies become available to steady the c ...
Monday, 18 April 22
FINNISH 'LOOPHOLES' ALLOW IMPORTS OF RUSSIAN COAL AND OIL TO CONTINUE - EURONEWS
Activists in Finland are calling for the government to clamp down faster on state-owned companies that continue to import raw materials from Russia ...
Monday, 18 April 22
GOVT IN DISCUSSION WITH WORLD BANK ON FRAMEWORK FOR COAL MINE CLOSURE - BUSINESS STANDARD
The coal ministry is in discussions with the World Bank for collaboration on the mine closure framework, a government official said on Wednesday.
...
Monday, 18 April 22
DEMAND FOR THERMAL COAL TO RISE DUE TO INCREASE IN ELECTRICITY DEMAND: INDIAN COAL MINISTRY - PTI
Coal block allocatees have a golden opportunity to augment production as the demand for thermal coal will rise due to an increase in electricity de ...
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- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- White Energy Company Limited
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- SMG Consultants - Indonesia
- Australian Coal Association
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
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