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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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Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
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Showing 21 to 25 news of total 6846 |
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- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- PTC India Limited - India
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Planning Commission, India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Toyota Tsusho Corporation, Japan
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Australian Coal Association
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
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