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Friday, 10 July 20
SLOW RECOVERY IN TANKER RATES TO WEIGH ON BUANA LINTAS LAUTAN - FITCH RATINGS
 Fitch Ratings believes that international tanker rates are likely improve after their sharp fall since May 2020, albeit at a slow pace. The weakness in rates may weigh on the financial profile of PT Buana Lintas Lautan Tbk (BULL, B+/Negative), which has around 15% of its fleet capacity earning revenue based on international spot rates.
The Baltic Dirty Tanker Index, which is made up from 12 Baltic international routes and mainly for crude oil shipping, has declined to below 500 points, from an average of 1,200 in March-April 2020, and is at its lowest since 2009. The index averaged 855 points in 2019 and around 770 points since 2009. Similarly, the Baltic Clean Tanker Index for refined fuel shipping has fallen to below 400 points from an average of around 1,305 points in April 2020.
The sharp fall in rates follows lower demand for global oil transportation with the OPEC+ alliance announcing in April 2020 an agreement to cut output by 9.7 million barrels per day (mbpd), or 10% of global output, from May 1. The group agreed in June to extend the production cut by one month through the end of July. The cut in output also resulted in a sharp rally in crude oil prices, with Brent price increasing to over USD40 per barrel (bbl) from around USD20/bbl near mid-April. Higher oil prices reduced the demand for floating storage and such tankers were freed, increasing spare capacity and pressuring rates.
Tanker demand has declined sharply since March-April, when Saudi Arabia increased its oil output ahead of the OPEC+ deal to cut production. The effect of increased oil output on tanker rates was compounded by the sharp fall in oil prices, which caused the futures curve to be in contango and incentivised oil storage on land and in tankers.
Demand for tankers is likely to improve from August with a reduction in the OPEC+ cuts to 7.7mbpd until the end of the 2020 and further to 5.8mbpd from January 2021. However, the output cut will continue weighing on tanker rates and improvement in rates is likely to be a gradual process.
Indonesian tanker operators PT Soechi Lines Tbk (B/Stable) and BULL benefit from largely stable rates in the domestic market, which is protected from foreign competition by cabotage laws and dominated by state-owned oil major PT Pertamina (Persero) (BBB/Stable) which is the main revenue driver.
However, BULL’s exposure to international rate volatility has increased this year. BULL had 24 of its 25 ships, or 93% of its fleet capacity, under standard time-charter contracts as of end-2019 while one tanker was part of a pool of ships managed by a pool operator and earned revenue based on international spot rates. The share of BULL’s fleet capacity managed by the pool operator has increased to 14% by end-2Q20 with three out of 33 ships being part of the pool. Additionally, BULL has two ships constituting 10% of its capacity under time-charter contracts with a base rate and upside if international spot rates are higher.
The company said it is seeking to switch the fleet under the pool operator to short-term time charter contracts of three to six months from September 2020 to limit the impact of the fall in tanker rates. Nonetheless, the Negative Outlook on BULL’s rating reflects risks to its financial profile from weak international rates, apart from sustained spending on fleet expansion. We estimate FFO gross leverage to increase to 3.8x in 2021, from 2.9x in 2020 (2019: 4.3x), due to lower international rates and EBITDA. We also assume BULL acquires five more ships for USD100 million in 2021.
Source: Fitch Ratings
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Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
Friday, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
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- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- PTC India Limited - India
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Australian Coal Association
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
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