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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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Wednesday, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
Friday, 04 February 22
RENEWABLES ON THE RISE, COAL CONTINUOUSLY FALLING - EUROPEAN COMMISSION
Although oil (34.5%) and natural gas (23.7%) were still the most important fuel sources in the EU energy mix in 2020, renewable energy’s shar ...
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- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- White Energy Company Limited
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Planning Commission, India
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
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