Tuesday, 31 August 2010
The LNG industry is being buffeted by forces in other energy markets that could determine whether proposed projects are built and how LNG sales are priced, an industry observer said late Monday at an LNG conference in Perth, Australia In the short term, prospects for the Asia-Pacific market appear bullish, Brian Johnson of Pricewaterhouse Coopers Australia said in a talk at the 5th Annual LNG World conference.Annual capex for energy development in the Asia-Pacific region, he said, "is expected to grow strongly, fueled by giant LNG projects competing to supply growing Asian energy requirements."Gas and LNG "is where the big investment is going forward," with multiple projects aiming to fill a looming supply gap in regional gas demand in 2013-14, he said.Along with growing energy demand in Asia, LNG also stands to gain from public concern about the environmental impacts of energy use. Concerns about climate change are less of a driver for low-carbon energy sources than a few years ago, Johnson said, but pollution abatement -- reducing SO2, NOx and particulate emissions -- remains an important consideration.But in North America, shale gas development has weakened gas prices, though President Barack Obama's moratorium on deepwater offshore drilling could help gas prices in the medium term, Johnson said. He voiced doubts, though, as to whether shale gas offers an attractive long-run investment."In the US, $4/Mcf [price for gas] isn't sustainable at funding costs [for shale gas] of $3.8/Mcf on average and operating costs of $1.7/Mcf," he told conference attendees. Energy companies are cutting their budgets for developing shale gas, he said, while shifting their focus to extracting shale oil.In global LNG export markets, a significant number of contracts are being underwritten for shorter durations. Many contracts since 2002 run for less than 10 years, Johnson said, "with several recently for one year or less...major Asian buyers are taking smaller volumes of gas for shorter periods."Still, though the number of short-term contracts has grown over the past eight years, he said, most LNG contracts feature longer-term sale agreements.Pricing trends remain murky. Index formulas are not standardized and in Asia pricing is largely indexed to oil, Johnson noted. Further, large disparities can be seen in global markets for conventional fuels."European and Asian gas markets are diverging from the Americas in their forward price outlook based on the fundamentals of their respective markets," he said. "Crude oil and gas prices are beginning to diverge in the Americas, while in Europe and Asia the ratio of crude oil prices to gas has decreased."Johnson said he saw several market developments that could determine how pricing indices are fashioned in the future, including greater price-averaging periods to reduce pricing volatility and price moderation produced by eliminating the so-called S-Curve from formulas."The degree of support for transparency in global LNG pricing through a standardized index is mixed," he said. "Support will grow with increasing flexibility in the market, and additional facilities and market participants."
Source: Platts
Tuesday 31 August 2010
Congestion at Indonesian ports worsen
Tuesday, 31 August 2010
Congestion at three international seaports in Indonesia have become worse following a surge in goods shipment ahead of Idul Fitri 2010 and an increase in import flow, reported Bisnis Indonesia The container capacity has been unable to accommodate surging flow of goods at the ports of Pontianak, Banjarmasin and Belawan."Congestion at the three ports is getting worse," said co-chairperson for container transportation at the Indonesian National Shipowners' Association (INSA) Asmari Herry.According to him, ships at the three ports had to wait for five to seven days to get docking services. In Belawan, the congestion was attributable to damaged equipment and surging flow of imported goods.He explained the frequency of ships serving Banjarmasin port surged significantly since demand for goods shipment jumped by 15 to 20 percent, ahead of Idul Fitri.The same situation also happened in Pontianak. "Damaged equipment and poor piling yard capacity exacerbate the situation, creating high-cost economy." The INSA suggested Pelindo take swift actions by bolstering the piling capacity at the three seaports. "Otherwise, the cost will be higher, affecting goods prices."Last week, at least six container vessels carrying staple goods had been queuing for seven days, waiting for docking services at Pontianak port. However, state port operator Pelindo II early this week said it would relocate empty containers massively.Solikhin, general manager of Pontianak-branch PT Pelindo II, stated the company had to rent one hectare of area located around 500m from the port to accommodate empty containers, which took up more than 50 percent of the total capacity.According to him, the congestion was attributable to an increase in container flow and to project works.On the other hand, the volume of imported containers that have to undergo physical inspections by the local Custom and Excise office at Tanjung Priok Port is still high due to a surge in import activities since the fasting month.
Source: CargonewsAsia
Congestion at three international seaports in Indonesia have become worse following a surge in goods shipment ahead of Idul Fitri 2010 and an increase in import flow, reported Bisnis Indonesia The container capacity has been unable to accommodate surging flow of goods at the ports of Pontianak, Banjarmasin and Belawan."Congestion at the three ports is getting worse," said co-chairperson for container transportation at the Indonesian National Shipowners' Association (INSA) Asmari Herry.According to him, ships at the three ports had to wait for five to seven days to get docking services. In Belawan, the congestion was attributable to damaged equipment and surging flow of imported goods.He explained the frequency of ships serving Banjarmasin port surged significantly since demand for goods shipment jumped by 15 to 20 percent, ahead of Idul Fitri.The same situation also happened in Pontianak. "Damaged equipment and poor piling yard capacity exacerbate the situation, creating high-cost economy." The INSA suggested Pelindo take swift actions by bolstering the piling capacity at the three seaports. "Otherwise, the cost will be higher, affecting goods prices."Last week, at least six container vessels carrying staple goods had been queuing for seven days, waiting for docking services at Pontianak port. However, state port operator Pelindo II early this week said it would relocate empty containers massively.Solikhin, general manager of Pontianak-branch PT Pelindo II, stated the company had to rent one hectare of area located around 500m from the port to accommodate empty containers, which took up more than 50 percent of the total capacity.According to him, the congestion was attributable to an increase in container flow and to project works.On the other hand, the volume of imported containers that have to undergo physical inspections by the local Custom and Excise office at Tanjung Priok Port is still high due to a surge in import activities since the fasting month.
Source: CargonewsAsia
Monday 9 August 2010
Indonesia and Turkey Beat Investors’ Expectations by Outperforming BRICs
Jakarta. Indonesia and Turkey are outpacing the biggest emerging markets by almost any financial measure, even while they may be too small to join the BRICs. Indonesia’s equity index has climbed 21 percent this year and Turkey’s rose 13 percent, both hitting all-time highs on July 29. Credit-market rallies sent yields on the nations’ foreign-currency debt to the lowest levels on record, JPMorgan Chase’s EMBI Global gauges show.
The MSCI BRIC Index of shares in Brazil, Russia, India and China is still 42 percent below its peak after losing 1.2 percent this year. Less than two years after the global financial crisis prompted concern Indonesia and Turkey would default, investors are betting lower debt, growing populations and rising profit will spur economic expansions that led Goldman Sachs Group’s Jim O’Neill to promote the BRIC nations in 2001.
While China’s gross domestic product is about 4.2 times Turkey and Indonesia’s combined, they lead the “Next 11” smaller emerging nations with the most potential to affect world growth, O’Neill says. “There’s a paradigm shift in the way both countries have been governed and in terms of economic performance,” said Amer Bisat, a former International Monetary Fund economist who helps oversee more than $1 billion at hedge-fund Traxis Partners in New York. Indonesia and Turkey are “large, extremely systemically important and stable,” he said. “The market is looking at them in a very different light.”
The largest emerging-market stock mutual fund managers, which oversee about $250 billion, boosted their holdings in Indonesia and Turkey to the top “overweight” positions among 21 markets in June on expectations the gains will continue, data compiled by Cambridge, Massachusetts-based EPFR Global and JPMorgan of New York show. The fund managers are increasingly optimistic as profit growth outpaces share prices in both countries, leaving the Jakarta Composite Index and ISE National 100 Index trading at price-earnings ratios about 20 percent below their pre-crisis peaks, according to Bloomberg.
Mark Mobius, who oversees about $34 billion as the Singapore-based chairman of Templeton Asset Management, said last month by e-mail that he planned to increase holdings of stocks in Turkey, where the firm already has more than $1 billion invested. In June, he blogged that Templeton has a “positive take on investment opportunities” in Indonesia, while Antoine van Agtmael, chairman and chief investment officer of Emerging Markets Management in Arlington, Virginia, said on Bloomberg Television that the country was the most attractive among Southeast Asian markets.
The bullish bets are a turnaround from 2008, when investors shunned Indonesia and Turkey as the global economy fell into the worst recession since World War II. The JCI and ISE both sank more than 50 percent, the nations’ currencies weakened at least 15 percent against the dollar and credit-default swap prices suggested a 66 percent chance of default for Indonesia and 52 percent odds for Turkey, Bloomberg data show. Indonesian stocks are becoming more expensive relative to other developing markets. The Jakarta gauge trades at 13.5 times analysts’ estimates for earnings over the next 12 months, near the highest on record relative to the MSCI Emerging Markets Index, which is valued at 11.2 times, according to data compiled by Bloomberg since 2006.
The MSCI BRIC gauge has a ratio of 11. Turkish stock valuations factor in the nation’s political risks, while Indonesian companies have shown they can surpass analysts’ earnings projections, according to Martial Godet, who helps oversee more than $60 billion as the Paris-based head of emerging markets at BNP Paribas Investment Partners. The ISE is valued at 9.6 times analysts’ profit forecasts for the next 12 months, a 14 percent discount to the MSCI emerging index, and companies in the JCI have beat analysts’ profit projections during the past five quarters, data compiled by Bloomberg show. “The momentum is good for both markets,” Godet said. “They are not mainstream investments so people will continue to add money.
In both cases we have populated countries that are growing very well.” President Susilo Bambang Yudhoyono oversaw economic expansion of at least 4 percent throughout the global recession. That helped the JCI jump 175 percent from its 2008 low to 3,060.59 on Aug. 6, about 1.2 percent below the all-time closing high of 3,096.82. The stock benchmark closed up 0.7 percent on Monday, while the MSCI Emerging Markets Index climbed 0.4 percent to its highest in more than three months. Indonesia’s $540 billion economy is expected to grow 6 percent this year, fueled in part by rising consumer spending among the nation’s 237 million people as well as rising commodity prices, according to estimates from the Washington-based IMF. The rupiah has surged 41 percent from its 2008 low and is trading at the strongest level versus the dollar since June 2007.
Bloomberg
The MSCI BRIC Index of shares in Brazil, Russia, India and China is still 42 percent below its peak after losing 1.2 percent this year. Less than two years after the global financial crisis prompted concern Indonesia and Turkey would default, investors are betting lower debt, growing populations and rising profit will spur economic expansions that led Goldman Sachs Group’s Jim O’Neill to promote the BRIC nations in 2001.
While China’s gross domestic product is about 4.2 times Turkey and Indonesia’s combined, they lead the “Next 11” smaller emerging nations with the most potential to affect world growth, O’Neill says. “There’s a paradigm shift in the way both countries have been governed and in terms of economic performance,” said Amer Bisat, a former International Monetary Fund economist who helps oversee more than $1 billion at hedge-fund Traxis Partners in New York. Indonesia and Turkey are “large, extremely systemically important and stable,” he said. “The market is looking at them in a very different light.”
The largest emerging-market stock mutual fund managers, which oversee about $250 billion, boosted their holdings in Indonesia and Turkey to the top “overweight” positions among 21 markets in June on expectations the gains will continue, data compiled by Cambridge, Massachusetts-based EPFR Global and JPMorgan of New York show. The fund managers are increasingly optimistic as profit growth outpaces share prices in both countries, leaving the Jakarta Composite Index and ISE National 100 Index trading at price-earnings ratios about 20 percent below their pre-crisis peaks, according to Bloomberg.
Mark Mobius, who oversees about $34 billion as the Singapore-based chairman of Templeton Asset Management, said last month by e-mail that he planned to increase holdings of stocks in Turkey, where the firm already has more than $1 billion invested. In June, he blogged that Templeton has a “positive take on investment opportunities” in Indonesia, while Antoine van Agtmael, chairman and chief investment officer of Emerging Markets Management in Arlington, Virginia, said on Bloomberg Television that the country was the most attractive among Southeast Asian markets.
The bullish bets are a turnaround from 2008, when investors shunned Indonesia and Turkey as the global economy fell into the worst recession since World War II. The JCI and ISE both sank more than 50 percent, the nations’ currencies weakened at least 15 percent against the dollar and credit-default swap prices suggested a 66 percent chance of default for Indonesia and 52 percent odds for Turkey, Bloomberg data show. Indonesian stocks are becoming more expensive relative to other developing markets. The Jakarta gauge trades at 13.5 times analysts’ estimates for earnings over the next 12 months, near the highest on record relative to the MSCI Emerging Markets Index, which is valued at 11.2 times, according to data compiled by Bloomberg since 2006.
The MSCI BRIC gauge has a ratio of 11. Turkish stock valuations factor in the nation’s political risks, while Indonesian companies have shown they can surpass analysts’ earnings projections, according to Martial Godet, who helps oversee more than $60 billion as the Paris-based head of emerging markets at BNP Paribas Investment Partners. The ISE is valued at 9.6 times analysts’ profit forecasts for the next 12 months, a 14 percent discount to the MSCI emerging index, and companies in the JCI have beat analysts’ profit projections during the past five quarters, data compiled by Bloomberg show. “The momentum is good for both markets,” Godet said. “They are not mainstream investments so people will continue to add money.
In both cases we have populated countries that are growing very well.” President Susilo Bambang Yudhoyono oversaw economic expansion of at least 4 percent throughout the global recession. That helped the JCI jump 175 percent from its 2008 low to 3,060.59 on Aug. 6, about 1.2 percent below the all-time closing high of 3,096.82. The stock benchmark closed up 0.7 percent on Monday, while the MSCI Emerging Markets Index climbed 0.4 percent to its highest in more than three months. Indonesia’s $540 billion economy is expected to grow 6 percent this year, fueled in part by rising consumer spending among the nation’s 237 million people as well as rising commodity prices, according to estimates from the Washington-based IMF. The rupiah has surged 41 percent from its 2008 low and is trading at the strongest level versus the dollar since June 2007.
Bloomberg
Tuesday 20 July 2010
Knutsen tanker agound off Houston
(July 16 2010)
The US Coast Guard (USCG) was continuing its attempt to free a tanker that ran aground at the intersection of the Houston Ship Channel and the intracoastal waterway on Thursday.
The 22,100 dwt chemical tanker ‘Isabel Knutsen’ became stuck at about 6 am local time Tuesday after losing its steering control, USCG officials said.
Tugs were unable to free the vessel, which was loaded with about 17,000 tonnes of chemicals and 700 tonnes of fuel oil.
USCG officials said a lightering operation would now take place to remove enough of the cargo to enable the vessel to float free.
The ship is structurally sound and is not discharging any liquids into the water, USCG said.
The refloating operation was not causing interruption to other ships using the channel, officials said.
Cmdr Jim Elliott, commanding officer of USCG’s marine safety unit Galveston, said in a statement. “Attempts to refloat the vessel have been unsuccessful. We will now oversee the lightering of the ship’s cargo to refloat the vessel, ensure the safety of the crew and prevent any environmental impacts.”
“The Coast Guard and Texas General Land Office will oversee the process,” Elliott said.
Source: Tanker Operator
The US Coast Guard (USCG) was continuing its attempt to free a tanker that ran aground at the intersection of the Houston Ship Channel and the intracoastal waterway on Thursday.
The 22,100 dwt chemical tanker ‘Isabel Knutsen’ became stuck at about 6 am local time Tuesday after losing its steering control, USCG officials said.
Tugs were unable to free the vessel, which was loaded with about 17,000 tonnes of chemicals and 700 tonnes of fuel oil.
USCG officials said a lightering operation would now take place to remove enough of the cargo to enable the vessel to float free.
The ship is structurally sound and is not discharging any liquids into the water, USCG said.
The refloating operation was not causing interruption to other ships using the channel, officials said.
Cmdr Jim Elliott, commanding officer of USCG’s marine safety unit Galveston, said in a statement. “Attempts to refloat the vessel have been unsuccessful. We will now oversee the lightering of the ship’s cargo to refloat the vessel, ensure the safety of the crew and prevent any environmental impacts.”
“The Coast Guard and Texas General Land Office will oversee the process,” Elliott said.
Source: Tanker Operator
Tanker sector to benefit from US offshore production moratorium
Saturday, 17 July 2010
The US offshore production moratorium, implemented on 13th July, could have a beneficial effect on the tanker market. This moratorium will expire on 30th November as it stands. It was pushed through in the wake of the ‘Deepwater Horizon’ spill despite several legal challenges. Deepwater production will be allowed to continue and new exploratory drilling suspensions could be modified if the oil industry can prove that the operations are safe. Shallow water drilling will also be allowed to continue if companies can meet new safety and environmental requirements. However, it could take some considerable time for companies to meet the new more stringent conditions. As a result of the production moratorium, the International Energy agency (IEA) recently identified between 100,000 and 300,000 barrels per day of new projects that could be delayed by 2015. Leading tanker consultancy McQuilling said that although 300,000 barrels per day only amounts to 1.5% of the total US liquid fuels consumption, the potential impact on tankers adds up to an additional five VLCC cargoes per month. If these cargoes were sourced from the Middle East Gulf, this would create an extra 17.3 bill tonne/miles of demand for tankers. Any delays to projects will hamper US domestic output in a period of increasing demand and the liquids will have to sourced from elsewhere. Despite the aim of the US administration to reduce its dependence on foreign oil, it is likely that the oil tanker sector will fill the void on the back of increased imports. McQuilling said that this situation was likely to continue while the moratorium persists and domestic production becomes more cumbersome to industry participants due to the increase in stringent regulations.
Source: Tanker Operator
The US offshore production moratorium, implemented on 13th July, could have a beneficial effect on the tanker market. This moratorium will expire on 30th November as it stands. It was pushed through in the wake of the ‘Deepwater Horizon’ spill despite several legal challenges. Deepwater production will be allowed to continue and new exploratory drilling suspensions could be modified if the oil industry can prove that the operations are safe. Shallow water drilling will also be allowed to continue if companies can meet new safety and environmental requirements. However, it could take some considerable time for companies to meet the new more stringent conditions. As a result of the production moratorium, the International Energy agency (IEA) recently identified between 100,000 and 300,000 barrels per day of new projects that could be delayed by 2015. Leading tanker consultancy McQuilling said that although 300,000 barrels per day only amounts to 1.5% of the total US liquid fuels consumption, the potential impact on tankers adds up to an additional five VLCC cargoes per month. If these cargoes were sourced from the Middle East Gulf, this would create an extra 17.3 bill tonne/miles of demand for tankers. Any delays to projects will hamper US domestic output in a period of increasing demand and the liquids will have to sourced from elsewhere. Despite the aim of the US administration to reduce its dependence on foreign oil, it is likely that the oil tanker sector will fill the void on the back of increased imports. McQuilling said that this situation was likely to continue while the moratorium persists and domestic production becomes more cumbersome to industry participants due to the increase in stringent regulations.
Source: Tanker Operator
Stolt-Nielsen to move to Bermuda
(July 16 2010)
Stolt-Nielsen (SNSA) is to move its parent company from Luxembourg to Bermuda, subject to shareholders’ agreement.
Luxembourg's special holding company regime will end on 31st December, 2010, as part of ongoing initiatives to harmonise laws and regulations among the EU member states.
The proposed move is intended to enable the company and its shareholders to continue to benefit from a legal structure similar to that which SNSA has experienced as a holding company in Luxembourg since 1974.
It is still subject to SNSA shareholders’ approval and will be voted upon at an extraordinary general meeting to be held in Luxembourg at a date still to be determined.
If approved, the move is expected to be completed by the close of SNSA's fiscal year on 30th November, 2010.
The migration is not expected to result in any significant practical changes, from either a shareholder perspective, or in terms of the company's functional structure, locations or operations, SNSA said.
Shares would continue to be traded on the Oslo Børs.
Commenting on the announcement, Niels Stolt-Nielsen, SNSA CEO, said: "The board of directors of SNSA and the company's management are confident that this proposal, if approved, will enable the company to continue to optimise the benefits of its current structure."
Stolt-Nielsen (SNSA) is to move its parent company from Luxembourg to Bermuda, subject to shareholders’ agreement.
Luxembourg's special holding company regime will end on 31st December, 2010, as part of ongoing initiatives to harmonise laws and regulations among the EU member states.
The proposed move is intended to enable the company and its shareholders to continue to benefit from a legal structure similar to that which SNSA has experienced as a holding company in Luxembourg since 1974.
It is still subject to SNSA shareholders’ approval and will be voted upon at an extraordinary general meeting to be held in Luxembourg at a date still to be determined.
If approved, the move is expected to be completed by the close of SNSA's fiscal year on 30th November, 2010.
The migration is not expected to result in any significant practical changes, from either a shareholder perspective, or in terms of the company's functional structure, locations or operations, SNSA said.
Shares would continue to be traded on the Oslo Børs.
Commenting on the announcement, Niels Stolt-Nielsen, SNSA CEO, said: "The board of directors of SNSA and the company's management are confident that this proposal, if approved, will enable the company to continue to optimise the benefits of its current structure."
Thursday 15 July 2010
Industrial Production in U.S. Increased 0.1% in June
Friday, 16 July 2010
Industrial production in the U.S. unexpectedly rose in June as higher temperatures across the nation led to increased utility use. Factory output, which makes up 75 percent of the total, declined the most in a year Production at factories, mines and utilities increased 0.1 percent after a 1.3 percent gain in May, figures from the Federal Reserve showed today. Economists had forecast a 0.1 percent drop in June, according to the median estimate in a Bloomberg News survey. Utility output rose 2.7 percent, while production at manufacturers declined 0.4 percent.Factories, which led the economy out of the worst recession since the 1930s, are facing less pressure to boost production to rebuild inventories as consumer spending cools. Manufacturers will instead be able to count on gains in business investment that have spurred sales and earnings at companies such as Intel Corp.“The manufacturing recovery is looking a bit more mixed than it was a few months ago when it was hard to find any signs of weakness in the data,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “Ultimately, businesses aren’t going to be investing at a rapid pace if consumers are going to be more moderate.”Estimates of the 76 economists surveyed by Bloomberg for June production ranged from a drop of 0.8 percent to an increase of 0.8 percent.Stocks fell on the manufacturing data and after a report showing China’s economic growth is moderating. The Standard & Poor’s 500 Index fell 0.7 percent to 1,087.23 at 10:05 a.m. in New York. The 10-year Treasury note was yielding 3 percent, down from 3.04 percent late yesterday.Empire ManufacturingManufacturing in the New York and Philadelphia regions grew at slower paces this month, an earlier report showed. The New York Fed’s Empire State Index that covers manufacturing in New York, northern New Jersey and southern Connecticut fell to 5.1 in July, the lowest level this year. The Philadelphia Fed’s general economic index dropped to 5.1 in July, the lowest since August 2009, from 8 the prior month. Readings above zero indicate expansion.Other reports showed initial jobless claims declined, reflecting a smaller number of factory closings for this time of year, and producer prices dropped more than forecast.The Fed’s report showed U.S. capacity utilization, which measures the amount of a plant that is in use, held at 74.1 percent last month. The gauge averaged 80 over the past 20 years and suggests inflation remains low.Utility OutputUtility output increased after a 5.6 percent jump in May. Helping to boost utility demand, last month was the eighth- warmest June in 116 years, according to the National Climatic Data Center. Mining production, which includes oil drilling, rose 0.4 percent.Manufacturing was restrained by a decline in automobile production. Output of motor vehicles and parts dropped 1.9 percent in June after a 5.6 percent jump a month earlier. Excluding autos and parts, manufacturing was down 0.3 percent.Consumer goods production fell 0.6 percent. The output of appliances, furniture and carpeting dropped 1.7 percent after a 1.2 percent decrease.Production of business equipment increased 0.9 percent after a 1.4 percent rise in May. Output of computers and semiconductors led the gain last month.Business SpendingWhile limited job creation has restrained consumer spending, manufacturers are enjoying a pickup in business investment in new equipment. Manufacturing shares have also outperformed the market. The Standard & Poor’s Supercomposite Industrial Machinery Index of 52 companies has increased 8.2 percent this year through yesterday compared with a 1.8 percent decline in the broader S&P 500.“Capacity still needs to be increased in order to meet demand,” Richard Hill, chief executive officer of Novellus Systems Inc., said in an interview July 13. “There’s a major overhaul of pc’s throughout the corporate world.”Novellus, which makes semiconductor equipment, said July 12 bookings rose 20 in the second quarter compared with a year earlier and shipments increased 17 percent. “Challenges” in North America “are not as bad as people might report” and consumers are “reasonably confident that the economy is going to rebound,” Hill said in the interview.Intel, the world’s biggest chipmaker, said on July 13 that sales will be $11.6 billion this quarter, plus or minus $400 million. Analysts estimated $10.9 billion on average, according to a Bloomberg survey.Companies have resumed spending on PCs and servers, fueling demand for chips, said Chief Financial Officer Stacy Smith. “We saw a resurgence of the enterprise market” Smith said in an interview. “We see inventory levels that are healthy.”
Source: Bloomberg
Industrial production in the U.S. unexpectedly rose in June as higher temperatures across the nation led to increased utility use. Factory output, which makes up 75 percent of the total, declined the most in a year Production at factories, mines and utilities increased 0.1 percent after a 1.3 percent gain in May, figures from the Federal Reserve showed today. Economists had forecast a 0.1 percent drop in June, according to the median estimate in a Bloomberg News survey. Utility output rose 2.7 percent, while production at manufacturers declined 0.4 percent.Factories, which led the economy out of the worst recession since the 1930s, are facing less pressure to boost production to rebuild inventories as consumer spending cools. Manufacturers will instead be able to count on gains in business investment that have spurred sales and earnings at companies such as Intel Corp.“The manufacturing recovery is looking a bit more mixed than it was a few months ago when it was hard to find any signs of weakness in the data,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “Ultimately, businesses aren’t going to be investing at a rapid pace if consumers are going to be more moderate.”Estimates of the 76 economists surveyed by Bloomberg for June production ranged from a drop of 0.8 percent to an increase of 0.8 percent.Stocks fell on the manufacturing data and after a report showing China’s economic growth is moderating. The Standard & Poor’s 500 Index fell 0.7 percent to 1,087.23 at 10:05 a.m. in New York. The 10-year Treasury note was yielding 3 percent, down from 3.04 percent late yesterday.Empire ManufacturingManufacturing in the New York and Philadelphia regions grew at slower paces this month, an earlier report showed. The New York Fed’s Empire State Index that covers manufacturing in New York, northern New Jersey and southern Connecticut fell to 5.1 in July, the lowest level this year. The Philadelphia Fed’s general economic index dropped to 5.1 in July, the lowest since August 2009, from 8 the prior month. Readings above zero indicate expansion.Other reports showed initial jobless claims declined, reflecting a smaller number of factory closings for this time of year, and producer prices dropped more than forecast.The Fed’s report showed U.S. capacity utilization, which measures the amount of a plant that is in use, held at 74.1 percent last month. The gauge averaged 80 over the past 20 years and suggests inflation remains low.Utility OutputUtility output increased after a 5.6 percent jump in May. Helping to boost utility demand, last month was the eighth- warmest June in 116 years, according to the National Climatic Data Center. Mining production, which includes oil drilling, rose 0.4 percent.Manufacturing was restrained by a decline in automobile production. Output of motor vehicles and parts dropped 1.9 percent in June after a 5.6 percent jump a month earlier. Excluding autos and parts, manufacturing was down 0.3 percent.Consumer goods production fell 0.6 percent. The output of appliances, furniture and carpeting dropped 1.7 percent after a 1.2 percent decrease.Production of business equipment increased 0.9 percent after a 1.4 percent rise in May. Output of computers and semiconductors led the gain last month.Business SpendingWhile limited job creation has restrained consumer spending, manufacturers are enjoying a pickup in business investment in new equipment. Manufacturing shares have also outperformed the market. The Standard & Poor’s Supercomposite Industrial Machinery Index of 52 companies has increased 8.2 percent this year through yesterday compared with a 1.8 percent decline in the broader S&P 500.“Capacity still needs to be increased in order to meet demand,” Richard Hill, chief executive officer of Novellus Systems Inc., said in an interview July 13. “There’s a major overhaul of pc’s throughout the corporate world.”Novellus, which makes semiconductor equipment, said July 12 bookings rose 20 in the second quarter compared with a year earlier and shipments increased 17 percent. “Challenges” in North America “are not as bad as people might report” and consumers are “reasonably confident that the economy is going to rebound,” Hill said in the interview.Intel, the world’s biggest chipmaker, said on July 13 that sales will be $11.6 billion this quarter, plus or minus $400 million. Analysts estimated $10.9 billion on average, according to a Bloomberg survey.Companies have resumed spending on PCs and servers, fueling demand for chips, said Chief Financial Officer Stacy Smith. “We saw a resurgence of the enterprise market” Smith said in an interview. “We see inventory levels that are healthy.”
Source: Bloomberg
Soybean-Oil Imports by China May Be 200,000 Tons Monthly Through September
Friday, 16 July 2010
China, the world’s biggest consumer of vegetable oils, may import about 200,000 metric tons of soybean oil each month from July to September, the portal Grain.gov.cn said in an e-mailed report. The prediction compares with about 40,000 tons of incoming shipments in June, it said. Brazil is the largest supplier, with about 80 percent, while the U.S. ships the rest, it said. No shipments are likely from Argentina as China began to toughen quality requirements on its soybean oil exports in April, it said. Buyers in China have stopped signing purchase agreements with Argentina, it said. Argentina was the largest soybean oil supplier prior to that, customs data show.
Source: Bloomberg
Palm, Soybean Oil Imports by India to Rise on Demand
Thursday, 15 July 2010
India, the world’s second-biggest vegetable oil consumer after China, may boost imports of palm and soybean oils to meet rising demand during festivals amid a drop in domestic inventories. Purchases in the three months ending Oct. 31 may jump as much as 24 percent to 2.6 million metric tons from a year ago, Govindlal G. Patel, director of Dipak Enterprise, said in a phone interview today.Increased demand from India may push up palm oil prices in Malaysia by 20 percent to 2,800 ringgit a ton by November, said Patel, a vegetable oils trader for more than four decades. The country overtook China as the biggest buyer of the commodity in 2009, helping the edible oil to a 57 percent annual gain.“India will need incremental supplies to meet demand as there’s little available in terms of local supplies,” said Amol Tilak, analyst at Kotak Commodity Services Ltd. “Crushers are not processing oilseeds because of high domestic seed prices.”September-delivery palm oil advanced as much as 0.6 percent to 2,353 ringgit ($734) a ton, reversing an earlier loss.China, India, Pakistan and Indonesia, Asia’s most-populous countries, mark their important festivals in the quarter ending September, with communal meals stoking edible oils consumption. Malaysia’s palm oil inventories fell to a 10-month low in June.Palm oil purchases by India may top 500,000 tons on average each month through October, with soybean oil imports at 200,000 tons to 250,000 tons, Patel said. Sunflower oil shipments may be 50,000 tons each month, he said. China may import about 200,000 tons of soybean oil each month from July to September, the portal Grain.gov.cn said in a report today.Ramadan Demand“Palm oil demand will pick up from now on as soybean’s premium is increasing and buying for Ramadan demand begins,” Patel said. “That will be supportive for prices.”Soybean oil’s premium over palm oil was $112.8 a ton today, higher than the average $89.86 so far this year, according to Bloomberg data. The edible oils are direct substitutes.India’s vegetable oil imports dropped 26 percent to 558,765 tons in May from 751,097 tons a year earlier, the fifth monthly decline, as buyers pared inventories, the Solvent Extractors’ Association of India said June 15.Palm oil makes up almost 80 percent of the nation’s edible oil purchases.Inventories of edible oils at Indian ports have fallen 35 percent to about 550,000 tons at the end of June from about 845,000 tons in February, Patel said. Stocks of soybeans total 3.1 million tons and rapeseed 3.7 million tons, he said.Cooking oil imports in June probably dropped 11 percent to 660,000 tons from 742,000 tons a year earlier, he said.The area sown with soybean may drop to 7.3 percent to 8.9 million hectares this year, as farmers in the states of Madhya Pradesh and Maharashtra, the biggest growers, switch to more profitable crops such as cotton and lentils, Patel said.
Source: Bloomberg
India, the world’s second-biggest vegetable oil consumer after China, may boost imports of palm and soybean oils to meet rising demand during festivals amid a drop in domestic inventories. Purchases in the three months ending Oct. 31 may jump as much as 24 percent to 2.6 million metric tons from a year ago, Govindlal G. Patel, director of Dipak Enterprise, said in a phone interview today.Increased demand from India may push up palm oil prices in Malaysia by 20 percent to 2,800 ringgit a ton by November, said Patel, a vegetable oils trader for more than four decades. The country overtook China as the biggest buyer of the commodity in 2009, helping the edible oil to a 57 percent annual gain.“India will need incremental supplies to meet demand as there’s little available in terms of local supplies,” said Amol Tilak, analyst at Kotak Commodity Services Ltd. “Crushers are not processing oilseeds because of high domestic seed prices.”September-delivery palm oil advanced as much as 0.6 percent to 2,353 ringgit ($734) a ton, reversing an earlier loss.China, India, Pakistan and Indonesia, Asia’s most-populous countries, mark their important festivals in the quarter ending September, with communal meals stoking edible oils consumption. Malaysia’s palm oil inventories fell to a 10-month low in June.Palm oil purchases by India may top 500,000 tons on average each month through October, with soybean oil imports at 200,000 tons to 250,000 tons, Patel said. Sunflower oil shipments may be 50,000 tons each month, he said. China may import about 200,000 tons of soybean oil each month from July to September, the portal Grain.gov.cn said in a report today.Ramadan Demand“Palm oil demand will pick up from now on as soybean’s premium is increasing and buying for Ramadan demand begins,” Patel said. “That will be supportive for prices.”Soybean oil’s premium over palm oil was $112.8 a ton today, higher than the average $89.86 so far this year, according to Bloomberg data. The edible oils are direct substitutes.India’s vegetable oil imports dropped 26 percent to 558,765 tons in May from 751,097 tons a year earlier, the fifth monthly decline, as buyers pared inventories, the Solvent Extractors’ Association of India said June 15.Palm oil makes up almost 80 percent of the nation’s edible oil purchases.Inventories of edible oils at Indian ports have fallen 35 percent to about 550,000 tons at the end of June from about 845,000 tons in February, Patel said. Stocks of soybeans total 3.1 million tons and rapeseed 3.7 million tons, he said.Cooking oil imports in June probably dropped 11 percent to 660,000 tons from 742,000 tons a year earlier, he said.The area sown with soybean may drop to 7.3 percent to 8.9 million hectares this year, as farmers in the states of Madhya Pradesh and Maharashtra, the biggest growers, switch to more profitable crops such as cotton and lentils, Patel said.
Source: Bloomberg
Wednesday 14 July 2010
Odfjell sells ship for recycling
Another sign of scrapping gaining more momentum whereby some chemical players start to scrap their chemical tankers early. Last week we have Stolt scrapped its 22 year old chemical tanker and not one but two, there is additional news today that Odfjell has sold another coated parcel tanker to Chinese recyclers.
The latest vessel to leave the fleet was the 45,655 dwt 'Bow Prima', dating from 1987.
As with the other recent sales, the vessel has a Green Passport and the buyers undertook that the recycling yard will submit a working plan corresponding to IMO guidelines for ship recycling.
The vessel was sold at a loss of $3.3 mill, Odfjell said.
The latest vessel to leave the fleet was the 45,655 dwt 'Bow Prima', dating from 1987.
As with the other recent sales, the vessel has a Green Passport and the buyers undertook that the recycling yard will submit a working plan corresponding to IMO guidelines for ship recycling.
The vessel was sold at a loss of $3.3 mill, Odfjell said.
IMF chief sees little risk of double-dip recession
Wednesday, 14 July 2010
The International Monetary Fund's chief reiterated on Tuesday that strong growth in Asia and Latin America made it unlikely that the global economy would suffer a double-dip recession. Last week, the IMF upgraded its 2010 global economic growth forecast to 4.6 percent from 4.2 percent due to robust expansion in Asia and renewed U.S. private demand, but kept its 2011 outlook unchanged at 4.3 percent."We expect 2011 to be a little lower than the level of 2010. But all this is too far from any kind of double-dip," Managing Director Dominique Strauss-Kahn told a news conference in the central South Korean city of Daejeon."Certainly our forecast is not the forecast of a double-dip," Strauss-Kahn said.South Korea's Finance Minister Yoon Jeung-hyun, who also attended the conference, also voiced confidence in the global economy, saying a recent slowdown in the United States and China was temporary.The world economy has been recovering this year from its worst downturn in decades, but signs of cooling growth in the world's largest and third-biggest economies sparked worries that the global upswing could prove short-lived."The recent weak economic data in the U.S. and China is transitory with ends of governments' stimulus packages. They will be normalized soon," Yoon said.Yoon also sounded optimistic about Europe's ability to solve its fiscal problems, though he said it would take time and for now Asia was leading the global recovery."During the recent economic crisis, the Asian economy has spearheaded the global economic recovery with appropriate stimulus packages and sound macroeconomic conditions. This trend is expected to continue for a while," he said.Source: Reuters
The International Monetary Fund's chief reiterated on Tuesday that strong growth in Asia and Latin America made it unlikely that the global economy would suffer a double-dip recession. Last week, the IMF upgraded its 2010 global economic growth forecast to 4.6 percent from 4.2 percent due to robust expansion in Asia and renewed U.S. private demand, but kept its 2011 outlook unchanged at 4.3 percent."We expect 2011 to be a little lower than the level of 2010. But all this is too far from any kind of double-dip," Managing Director Dominique Strauss-Kahn told a news conference in the central South Korean city of Daejeon."Certainly our forecast is not the forecast of a double-dip," Strauss-Kahn said.South Korea's Finance Minister Yoon Jeung-hyun, who also attended the conference, also voiced confidence in the global economy, saying a recent slowdown in the United States and China was temporary.The world economy has been recovering this year from its worst downturn in decades, but signs of cooling growth in the world's largest and third-biggest economies sparked worries that the global upswing could prove short-lived."The recent weak economic data in the U.S. and China is transitory with ends of governments' stimulus packages. They will be normalized soon," Yoon said.Yoon also sounded optimistic about Europe's ability to solve its fiscal problems, though he said it would take time and for now Asia was leading the global recovery."During the recent economic crisis, the Asian economy has spearheaded the global economic recovery with appropriate stimulus packages and sound macroeconomic conditions. This trend is expected to continue for a while," he said.Source: Reuters
Stolt-Nielsen S.A. Proposes Plan to Migrate Parent Company to Bermuda
Wednesday, 14 July 2010
Stolt-Nielsen S.A. announced a proposed plan to migrate the location of the parent company to Bermuda from Luxembourg, where SNSA is currently registered. Luxembourg's special holding company regime will end as of December 31, 2010, as part of ongoing initiatives to harmonise laws and regulations among the member states of the European Union. The proposed move is intended to enable the Company and its shareholders to continue to benefit from a legal structure similar to that which the Company has experienced as a holding company in Luxembourg since 1974. The proposal is subject to the approval of SNSA shareholders and will be voted upon at an Extraordinary General Meeting of Shareholders to be held in Luxembourg at a date to be determined. If approved, the migration of SNSA to Bermuda is expected to be completed by the close of SNSA's fiscal year on November 30, 2010. The migration is not expected to result in any significant practical changes, from either a shareholder perspective or in terms of the Company's functional structure, locations or operations. Shares would continue to be traded on the Oslo Bors. Commenting on the announcement, Mr. Niels G. Stolt-Nielsen, Chief Executive Officer of SNSA, said: "The Board of Directors of SNSA and the Company's management are confident that this proposal, if approved, will enable the Company to continue to optimise the benefits of its current structure." Source: Stolt-Nielsen S.A.
Sunday 20 June 2010
Indonesia: Opportunities Abound
19 June 2010
Indonesia's huge infrastructure investment programme and rapid economic growth are powering up the construction sector, with opportunities aplenty for both foreign and domestic contractors. The Indonesian government has said that it is seeking upwards of $110bn from investors to finance infrastructure projects up to 2014. Overall, it expects some $150bn to be invested in infrastructure over the next four years, as the country aims to support 7% annual growth. Indonesian officials are keen to bring in foreign partners to drive infrastructure expansion.
In early June, representatives of Indonesian government officials met Chinese construction and electrical firms in Shanghai, hoping to lay the foundations for deals that could see Chinese contractors take on projects in Indonesia. A wide range of construction schemes were on the table. Ahmad Heryawan, the governor of West Java, spoke on behalf of the province's investment body, Jasa Sarana, which is looking for a partner to develop a $1bn, 240-km toll road between Bandung and Tasikmalaya, as well as a $1bn port at Cilamaya designed to relieve pressure on Tanjung Priok. According to Heryawan, Toyota Astra Motor, the Indonesian wing of the Japanese automaker, has already expressed an interest in the port project. Meanwhile, Riau and East Kalimantan provinces are looking to build many hundreds of kilometres of rail tracks, and East Kalimantan, a growing energy centre, is looking for an investor to take on the construction of a 930-MW power plant.
A number of projects are already under way, including the Jakarta Mass Rapid Transit (MRT) network, which will help alleviate the capital's chronic traffic problems. The first phase of construction for the 14.5-km line between Lebak Bulus and Dukuh Atas is expected to be complete by 2016, and the second by 2020. The project is part-funded by the international wing of the Japanese government-owned Japan Finance Corporation (JFC), the Japan Bank for International Cooperation (JBIC), which has invested substantial amounts in Indonesia. Foreign investors already present are well aware of the importance of Indonesia's investments in infrastructure and are upbeat about ongoing reforms that will encourage greater foreign and private sector participation. "The imperative for the government to address the many infrastructure-related issues the country faces has never been higher," Roy Olsen, the president director of Thiess, an Australian mining and construction company active in Indonesia, told OBG.
"There are indications that the government will review the law addressing the issue of land acquisition, which has been a major stumbling block in terms of encouraging foreign investment in the infrastructure sector under the public-private partnership model." Gita Wirawan, the chairman of Indonesia's Investment Coordinating Board (BKPM), has pointed out that the country has already made significant progress in easing investment. She cited the example of obtaining a business permit, which now takes between four hours and seven days, while it took six months in the past. Government projects have been a vital driving force for the construction industry during the global economic downturn, in Indonesia as elsewhere, though the country still managed impressive 4.5% growth in 2009 at a time when many other countries slipped into recession. State-led programmes will continue to remain important, but the private sector will also be increasingly vital as the economy expands. Bank Indonesia (BI), the country's central bank, has forecast economic growth of 6% in 2010 and 6.5% in 2011. According to the IMF and analyst surveys, growth is expected to come in around 6% this year, which is likely feed through into rising demand for construction services, residential, commercial, industrial and tourist property, as well as logistics following the enhancement of the transport network.
Sector players will be keeping a keen eye on BI's interest rate movements. They are hoping for a "Goldilocks" outcome in which rates are kept low enough to keep credit moving, after a spell in which liquidity was rather light, but ensuring that inflation, which had a serious impact on the industry in 2008, is kept in check. The bank expects to keep rates in the 6.5-7% bracket in 2010 and 2011, supporting Indonesia's rapid growth, with inflation at 4-6%, somewhat high by international standards but eminently manageable for a rising economy. The BI governor, Hartadi Sarwono, believes that "inflation pressure is still benign", allowing the BI to keep rates at the record low of 6.5% for the duration of this year. He expects loan growth of 20-24% in 2010, which should prove healthy for project finance in the private sector.
From: Oxford Business Group
Indonesia's huge infrastructure investment programme and rapid economic growth are powering up the construction sector, with opportunities aplenty for both foreign and domestic contractors. The Indonesian government has said that it is seeking upwards of $110bn from investors to finance infrastructure projects up to 2014. Overall, it expects some $150bn to be invested in infrastructure over the next four years, as the country aims to support 7% annual growth. Indonesian officials are keen to bring in foreign partners to drive infrastructure expansion.
In early June, representatives of Indonesian government officials met Chinese construction and electrical firms in Shanghai, hoping to lay the foundations for deals that could see Chinese contractors take on projects in Indonesia. A wide range of construction schemes were on the table. Ahmad Heryawan, the governor of West Java, spoke on behalf of the province's investment body, Jasa Sarana, which is looking for a partner to develop a $1bn, 240-km toll road between Bandung and Tasikmalaya, as well as a $1bn port at Cilamaya designed to relieve pressure on Tanjung Priok. According to Heryawan, Toyota Astra Motor, the Indonesian wing of the Japanese automaker, has already expressed an interest in the port project. Meanwhile, Riau and East Kalimantan provinces are looking to build many hundreds of kilometres of rail tracks, and East Kalimantan, a growing energy centre, is looking for an investor to take on the construction of a 930-MW power plant.
A number of projects are already under way, including the Jakarta Mass Rapid Transit (MRT) network, which will help alleviate the capital's chronic traffic problems. The first phase of construction for the 14.5-km line between Lebak Bulus and Dukuh Atas is expected to be complete by 2016, and the second by 2020. The project is part-funded by the international wing of the Japanese government-owned Japan Finance Corporation (JFC), the Japan Bank for International Cooperation (JBIC), which has invested substantial amounts in Indonesia. Foreign investors already present are well aware of the importance of Indonesia's investments in infrastructure and are upbeat about ongoing reforms that will encourage greater foreign and private sector participation. "The imperative for the government to address the many infrastructure-related issues the country faces has never been higher," Roy Olsen, the president director of Thiess, an Australian mining and construction company active in Indonesia, told OBG.
"There are indications that the government will review the law addressing the issue of land acquisition, which has been a major stumbling block in terms of encouraging foreign investment in the infrastructure sector under the public-private partnership model." Gita Wirawan, the chairman of Indonesia's Investment Coordinating Board (BKPM), has pointed out that the country has already made significant progress in easing investment. She cited the example of obtaining a business permit, which now takes between four hours and seven days, while it took six months in the past. Government projects have been a vital driving force for the construction industry during the global economic downturn, in Indonesia as elsewhere, though the country still managed impressive 4.5% growth in 2009 at a time when many other countries slipped into recession. State-led programmes will continue to remain important, but the private sector will also be increasingly vital as the economy expands. Bank Indonesia (BI), the country's central bank, has forecast economic growth of 6% in 2010 and 6.5% in 2011. According to the IMF and analyst surveys, growth is expected to come in around 6% this year, which is likely feed through into rising demand for construction services, residential, commercial, industrial and tourist property, as well as logistics following the enhancement of the transport network.
Sector players will be keeping a keen eye on BI's interest rate movements. They are hoping for a "Goldilocks" outcome in which rates are kept low enough to keep credit moving, after a spell in which liquidity was rather light, but ensuring that inflation, which had a serious impact on the industry in 2008, is kept in check. The bank expects to keep rates in the 6.5-7% bracket in 2010 and 2011, supporting Indonesia's rapid growth, with inflation at 4-6%, somewhat high by international standards but eminently manageable for a rising economy. The BI governor, Hartadi Sarwono, believes that "inflation pressure is still benign", allowing the BI to keep rates at the record low of 6.5% for the duration of this year. He expects loan growth of 20-24% in 2010, which should prove healthy for project finance in the private sector.
From: Oxford Business Group
Thursday 4 March 2010
Terrorist Group Planning Malacca Oil-Tanker Attacks
Friday, 05 March 2010
A terror alert from the Singapore navy to oil tankers in the Malacca Strait, a shipping lane that’s almost six times busier than the Suez Canal, may be linked to regional groups associated with al-Qaeda. Singapore’s navy has “received indication” that a terrorist group is planning attacks on oil tankers in the Malacca Strait, according to an advisory today from its Information Fusion Centre. “The warning should be taken seriously,” Rohan Gunaratna, the head of the Singapore-based International Center for Political Violence and Terrorism Research, said in an interview.
“There are terrorist groups in the region that have the intent to carry out terrorist attacks and some of these groups have relationships with al-Qaeda.” The advisory from the navy to the maritime community, sent through the Singapore Shipping Association, reflects the “significant” threat of marine and land-based attacks in the Malacca Strait amid an increase in global trade, Gunaratna said. “The terrorists’ intent is probably to achieve widespread publicity and showcase that it remains a viable group,” it said, without naming any groups. “This information does not preclude possible attacks on other large vessels with dangerous cargo.”
Shortest Route The 600-mile (965-kilometer) Malacca Strait, between Malaysia and the Indonesian island of Sumatra, is used by more than 90,000 vessels every year. It’s the shortest sea route between the Persian Gulf and North Asia, according to the U.S. Energy Information Administration. An estimated 15 million barrels a day of oil passed through the channel in 2006, about a third of global seaborne volumes. “Nearly half” of the world’s shipping fleet would need to reroute if the strait was blocked, the EIA said. “In the past there were a number of attempts to mount terrorist attacks in the Malacca Strait,” Gunaratna said. “The threat of terrorism in this region is still very significant.”
Governments in the region are likely to step up intelligence gathering, boost “protective security measures” and alert commercial partners when there’s a terror alert, he said. The Singapore navy has started “operational coordination” and information-sharing with regional partners, according to today’s advisory. A Singapore navy spokeswoman, Zheng Xinhui, couldn’t provide further details of the warning. Dinghies and ‘Sampans’ Past cases of successful terrorist attacks on tankers were carried out using smaller vessels such as dinghies, speedboats and fishing boats, which are common in the Malacca Strait, the advisory said. Wooden, 3-meter long fishing vessels that usually carry two fishermen, known as sampans, may be “exploited by perpetrators” and ship masters should steer clear of them, according to the advisory. The advisory recommended shipmasters to adopt defensive measures similar to those taken when transiting through the Gulf of Aden near Yemen. In October 2000, 17 American sailors were killed by a suicide bombing of the USS Cole warship docked at the port of Aden. The Singapore Shipping Association represents about 370 members including marine-fuel suppliers and trading companies.
Source: Bloomberg
A terror alert from the Singapore navy to oil tankers in the Malacca Strait, a shipping lane that’s almost six times busier than the Suez Canal, may be linked to regional groups associated with al-Qaeda. Singapore’s navy has “received indication” that a terrorist group is planning attacks on oil tankers in the Malacca Strait, according to an advisory today from its Information Fusion Centre. “The warning should be taken seriously,” Rohan Gunaratna, the head of the Singapore-based International Center for Political Violence and Terrorism Research, said in an interview.
“There are terrorist groups in the region that have the intent to carry out terrorist attacks and some of these groups have relationships with al-Qaeda.” The advisory from the navy to the maritime community, sent through the Singapore Shipping Association, reflects the “significant” threat of marine and land-based attacks in the Malacca Strait amid an increase in global trade, Gunaratna said. “The terrorists’ intent is probably to achieve widespread publicity and showcase that it remains a viable group,” it said, without naming any groups. “This information does not preclude possible attacks on other large vessels with dangerous cargo.”
Shortest Route The 600-mile (965-kilometer) Malacca Strait, between Malaysia and the Indonesian island of Sumatra, is used by more than 90,000 vessels every year. It’s the shortest sea route between the Persian Gulf and North Asia, according to the U.S. Energy Information Administration. An estimated 15 million barrels a day of oil passed through the channel in 2006, about a third of global seaborne volumes. “Nearly half” of the world’s shipping fleet would need to reroute if the strait was blocked, the EIA said. “In the past there were a number of attempts to mount terrorist attacks in the Malacca Strait,” Gunaratna said. “The threat of terrorism in this region is still very significant.”
Governments in the region are likely to step up intelligence gathering, boost “protective security measures” and alert commercial partners when there’s a terror alert, he said. The Singapore navy has started “operational coordination” and information-sharing with regional partners, according to today’s advisory. A Singapore navy spokeswoman, Zheng Xinhui, couldn’t provide further details of the warning. Dinghies and ‘Sampans’ Past cases of successful terrorist attacks on tankers were carried out using smaller vessels such as dinghies, speedboats and fishing boats, which are common in the Malacca Strait, the advisory said. Wooden, 3-meter long fishing vessels that usually carry two fishermen, known as sampans, may be “exploited by perpetrators” and ship masters should steer clear of them, according to the advisory. The advisory recommended shipmasters to adopt defensive measures similar to those taken when transiting through the Gulf of Aden near Yemen. In October 2000, 17 American sailors were killed by a suicide bombing of the USS Cole warship docked at the port of Aden. The Singapore Shipping Association represents about 370 members including marine-fuel suppliers and trading companies.
Source: Bloomberg
Tuesday 23 February 2010
Chembulk and BLT begin COA
Berlian Laju Tanker (BLT) and Connecticut subsidiary Chembulk have just begun a contract of affreightment (COA) with Petrobras to move ethanol cargoes on a route previously dominated by two competitors.
A market source says the chemical-tanker players will carry between 80,000 and 300,000 tonnes over a year from Brazil to the Far East. The deal, estimated to be worth about $12m to $18m per year, includes an option for a one-year extension.
Broker Gustavo Sa, whose Brazilian brokerage Tide Maritime Afretamentos was involved in garnering the COA, confirms the deal but declines to give details. Chembulk also declines to comment.
Although Indonesia-based BLT has carried cargoes on the route before, Petrobras's chemical exports to the Far East have traditionally been dominated by Stolt-Nielsen and Odfjell, a market source in Brazil says.
The Norwegian owners and Connecticut's Fairfield Chemical Carriers are all understood to have bid for the latest Petrobras COA on the route.
Twenty-seven BLT and Chembulk vessels that may be nominated to carry cargoes on the route are fully stainless steel and have an average age of 4.5 years, the source adds.
Source: Trade Winds –
A market source says the chemical-tanker players will carry between 80,000 and 300,000 tonnes over a year from Brazil to the Far East. The deal, estimated to be worth about $12m to $18m per year, includes an option for a one-year extension.
Broker Gustavo Sa, whose Brazilian brokerage Tide Maritime Afretamentos was involved in garnering the COA, confirms the deal but declines to give details. Chembulk also declines to comment.
Although Indonesia-based BLT has carried cargoes on the route before, Petrobras's chemical exports to the Far East have traditionally been dominated by Stolt-Nielsen and Odfjell, a market source in Brazil says.
The Norwegian owners and Connecticut's Fairfield Chemical Carriers are all understood to have bid for the latest Petrobras COA on the route.
Twenty-seven BLT and Chembulk vessels that may be nominated to carry cargoes on the route are fully stainless steel and have an average age of 4.5 years, the source adds.
Source: Trade Winds –
Wednesday 17 February 2010
Energy-Hungry China Eyes Indonesia
Hong Kong. Last year, it was Australia that drew Chinese suitors seeking energy, metals and coal deals — now it’s resource-rich Indonesia. China’s appetite for natural resources is undiminished despite 2009’s acquisition spree in Australia, Canada, and Africa. While those countries are still on China’s radar, Indonesia is commanding ever more of its deal-making attention.
PetroChina, Sinopec, Sinosteel, Minmetals and China Investment Corp., a $300 billion sovereign wealth fund, are all aggressively scouring Southeast Asia’s largest economy for takeover targets and joint venture partners, according to investment banking sources who know and advise the companies. Targets include LNG projects, oil blocks owned by foreign companies and coal mines, with some potential deals worth more than $1 billion, the sources said. “There’s enormous interest from China in Indonesia,” said an Asia-based investment banker who has advised companies on deals in Indonesia. “These include financing deals and stakes.”
Natural gas is at the top of China’s shopping list, the sources said. China is struggling to rely on gas for more of its surging energy needs — its LNG imports increased by two-thirds last year to 5.53 million tons. There are multiple LNG projects in need of financing and development partners in Indonesia, and China is hungry for a slice of the action. Indonesia’s giant Natuna gas project is one option for China. PetroChina’s parent, China National Petroleum Corp., as well as Chevron and Eni, has been named as a potential development partner with PT Pertamina.
Still, that development is mired in controversy. Indonesia said last year it awarded Pertamina the operating rights to the Natuna project because Exxon Mobil’s contract giving it a 76 percent share had expired in 2005. The US oil major, however, has repeatedly said the contract ran until early 2009. While Indonesia presents an opportunity for China, the country comes with ample risks — from political corruption to opaque regulations and growing resource nationalism. But China has already set the stage for more aggressive dealmaking in Indonesia’s politically sensitive resources industry. CIC agreed in September to loan $1.9 billion to coal firm PT Bumi Resources, which is controlled by the politically connected Bakrie group. And it would like to pursue more of these opportunities in Indonesian resource companies, the sources say.
Source: Reuters
PetroChina, Sinopec, Sinosteel, Minmetals and China Investment Corp., a $300 billion sovereign wealth fund, are all aggressively scouring Southeast Asia’s largest economy for takeover targets and joint venture partners, according to investment banking sources who know and advise the companies. Targets include LNG projects, oil blocks owned by foreign companies and coal mines, with some potential deals worth more than $1 billion, the sources said. “There’s enormous interest from China in Indonesia,” said an Asia-based investment banker who has advised companies on deals in Indonesia. “These include financing deals and stakes.”
Natural gas is at the top of China’s shopping list, the sources said. China is struggling to rely on gas for more of its surging energy needs — its LNG imports increased by two-thirds last year to 5.53 million tons. There are multiple LNG projects in need of financing and development partners in Indonesia, and China is hungry for a slice of the action. Indonesia’s giant Natuna gas project is one option for China. PetroChina’s parent, China National Petroleum Corp., as well as Chevron and Eni, has been named as a potential development partner with PT Pertamina.
Still, that development is mired in controversy. Indonesia said last year it awarded Pertamina the operating rights to the Natuna project because Exxon Mobil’s contract giving it a 76 percent share had expired in 2005. The US oil major, however, has repeatedly said the contract ran until early 2009. While Indonesia presents an opportunity for China, the country comes with ample risks — from political corruption to opaque regulations and growing resource nationalism. But China has already set the stage for more aggressive dealmaking in Indonesia’s politically sensitive resources industry. CIC agreed in September to loan $1.9 billion to coal firm PT Bumi Resources, which is controlled by the politically connected Bakrie group. And it would like to pursue more of these opportunities in Indonesian resource companies, the sources say.
Source: Reuters
Tuesday 16 February 2010
Lower TCEs hit Odfjell
(Feb 12 2010) Parcel tanker and terminal operator Odfjell’s fourth quarter and full year results were badly affected by a large compensation payment.
The company announced a pre-tax net 4Q09 result of $14 mill, compared with $62 mill for the same period last year. For the whole year, Odfjell said that the net pre-tax result was $26 mill, compared with $146 mill reported in 2008.
Odfjell’s 2009 figure included a compensation payment of $43 mill and impairment charges of $14 mill, while the 2008 result included capital gains of $53 mill.
Last year’s EBITDA came in at $182 mill, compared with $286 mill in 2008. EBIT, which included the compensation and impairment charges, was $61 mill, compared to $198 mill the previous year.
As for the parcel tanker business, EBITDA for 2009 was $73 mill, compared with $191 mill the year before. However, EBIT was a negative $6 mill, compared with a positive $129 mill in 2008.
The timecharter equivalent earnings (TCEs) were 19% down last year on the 2008 figures, while the 4Q09 TCEs were 7% lower than those seen in the 3Q09.
It was also announced that long serving chairman Bernt Daniel Odfjell would be stepping down in favour of his son Lawrence Ward Odfjell, who is currently president of Odfjell Terminals, at May’s annual general meeting.
As for the future, Odfjell reported that this year started on a slightly more positive note, especially for clean petroleum products, acids and basic chemical export from the MEG.
Disposal of older vessels should give the company better asset utilisation, thus enhancing the results for the rest of the fleet.
Overall fleet net supply will increase this year due to an influx of newbuildings. However, new orders have significantly diminished.
Vessel recycling will likely accelerate and Odfjell said that some newbuildings could be delayed, or even cancelled.
Although 2010 will see a challenging market, the company believed that the 4Q09 represented the bottom of the cycle.
Source: tanker Operator
The company announced a pre-tax net 4Q09 result of $14 mill, compared with $62 mill for the same period last year. For the whole year, Odfjell said that the net pre-tax result was $26 mill, compared with $146 mill reported in 2008.
Odfjell’s 2009 figure included a compensation payment of $43 mill and impairment charges of $14 mill, while the 2008 result included capital gains of $53 mill.
Last year’s EBITDA came in at $182 mill, compared with $286 mill in 2008. EBIT, which included the compensation and impairment charges, was $61 mill, compared to $198 mill the previous year.
As for the parcel tanker business, EBITDA for 2009 was $73 mill, compared with $191 mill the year before. However, EBIT was a negative $6 mill, compared with a positive $129 mill in 2008.
The timecharter equivalent earnings (TCEs) were 19% down last year on the 2008 figures, while the 4Q09 TCEs were 7% lower than those seen in the 3Q09.
It was also announced that long serving chairman Bernt Daniel Odfjell would be stepping down in favour of his son Lawrence Ward Odfjell, who is currently president of Odfjell Terminals, at May’s annual general meeting.
As for the future, Odfjell reported that this year started on a slightly more positive note, especially for clean petroleum products, acids and basic chemical export from the MEG.
Disposal of older vessels should give the company better asset utilisation, thus enhancing the results for the rest of the fleet.
Overall fleet net supply will increase this year due to an influx of newbuildings. However, new orders have significantly diminished.
Vessel recycling will likely accelerate and Odfjell said that some newbuildings could be delayed, or even cancelled.
Although 2010 will see a challenging market, the company believed that the 4Q09 represented the bottom of the cycle.
Source: tanker Operator
Shipowners win tax fight
(Feb 12 2010) Friday 12th February could go down as a historic day in Norwegian shipping history.
For this is the day that the Norwegian Supreme Court came down in favour of Norwegian domiciled shipping companies throwing out a retroactive government tax imposed in 2007 for the years 1996-2006.
The Court said that this move was in breach of the Norwegian Constitution.
Leading parcel tanker operator Odfjell commented that the effect of this decision will be to increase its equity by about $110 mill, including a refund of about $27 mill on already paid taxes and interest.
The company’s 2010 interest cost on the tax debt will also be reduced by about $5 mill.
“In an industry hard pressed by recessionary times this was most welcome news”, Odfjell said in a statement.
Source: Tanker Operator
For this is the day that the Norwegian Supreme Court came down in favour of Norwegian domiciled shipping companies throwing out a retroactive government tax imposed in 2007 for the years 1996-2006.
The Court said that this move was in breach of the Norwegian Constitution.
Leading parcel tanker operator Odfjell commented that the effect of this decision will be to increase its equity by about $110 mill, including a refund of about $27 mill on already paid taxes and interest.
The company’s 2010 interest cost on the tax debt will also be reduced by about $5 mill.
“In an industry hard pressed by recessionary times this was most welcome news”, Odfjell said in a statement.
Source: Tanker Operator
Norway high court says shippers to avoid back-tax
Saturday, 13 February 2010
Norway's supreme court ruled in favour of shipping companies that have disputed $3.8 billion in back-taxes on profits retained over many years, spurring a rally for some Norwegian shipping stocks. Six out of 11 judges on the supreme court found the retroactive tax unconstitutional, the court's verdict said.Norway's government met shipping companies in court on Friday to defend its tonnage tax that had imposed a big tax bill on the industry at a time when the global downturn is hurting profits.
A scheme presented in 2007 aims to make Norway's system similar to tonnage tax systems in countries of the European Union, of which Norway is not a member.It also imposed 21 billion crowns ($3.8 billion) in back taxes on undistributed profits retained by shippers over many years. The retroactive tax affected some 55 shippers, including some listed firms.Shares in oilfield supply shipper Farstad Shipping, one of the plaintiffs, rose 8.3 percent after the verdict, while parcel tanker group Odfjell rose 7.8 percent and car carrier Wilh. Wilhelmsen rose 5.8 percent at 1001 GMT.
"This confirms that retroactive taxation is not legal," Farstad said in a statement. "The verdict provides the basis for predictable conditions for shipping activities based in Norway."The shipping industry had clashed with the Labour-led government, calling the new tax a betrayal of a 1996 deal meant to keep them competitive under the Norwegian flag, and many say Norway's reputation as a maritime nation has taken a hit.
Source: Reuters
Norway's supreme court ruled in favour of shipping companies that have disputed $3.8 billion in back-taxes on profits retained over many years, spurring a rally for some Norwegian shipping stocks. Six out of 11 judges on the supreme court found the retroactive tax unconstitutional, the court's verdict said.Norway's government met shipping companies in court on Friday to defend its tonnage tax that had imposed a big tax bill on the industry at a time when the global downturn is hurting profits.
A scheme presented in 2007 aims to make Norway's system similar to tonnage tax systems in countries of the European Union, of which Norway is not a member.It also imposed 21 billion crowns ($3.8 billion) in back taxes on undistributed profits retained by shippers over many years. The retroactive tax affected some 55 shippers, including some listed firms.Shares in oilfield supply shipper Farstad Shipping, one of the plaintiffs, rose 8.3 percent after the verdict, while parcel tanker group Odfjell rose 7.8 percent and car carrier Wilh. Wilhelmsen rose 5.8 percent at 1001 GMT.
"This confirms that retroactive taxation is not legal," Farstad said in a statement. "The verdict provides the basis for predictable conditions for shipping activities based in Norway."The shipping industry had clashed with the Labour-led government, calling the new tax a betrayal of a 1996 deal meant to keep them competitive under the Norwegian flag, and many say Norway's reputation as a maritime nation has taken a hit.
Source: Reuters
Monday 15 February 2010
China's Growth May Top 11% Even as Officials Rein in Lending
Tuesday, 16 February 2010
China’s economy, the world’s third biggest, may expand at a faster pace in 2010 even as officials cool lending to restrain inflation and avert asset bubbles. Goldman Sachs Group Inc. maintained its forecast for 11.4 percent growth after the central bank raised reserve requirements for lenders on Feb. 12. That compares with an 8.7 percent expansion last year. Declines in stocks and commodities because of the reserve- ratio announcement highlighted concern that monetary tightening in China may trigger a slowdown that undermines the global recovery.
Rebounding exports, up for a second month in January, may boost a Chinese economy that last year depended on its own stimulus-fueled investment and consumption for growth. “The Chinese economy is in good shape and exports will be the biggest swing factor this year,” said Lu Ting, a Hong Kong-based economist for Bank of America-Merrill Lynch.
“Outside of China, people underestimate the government’s ability to manage the economy and the stimulus exit.” Merrill forecasts 10.1 percent growth and Capital Economics Ltd. sees a 10 percent gain, estimates unchanged from before the reserve-ratio announcement that takes effect Feb. 25. The Chinese central bank moved after banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) target for lending in January and property prices climbed the most in 21 months. Since October, policy makers have said managing inflation expectations is one of the government’s key objectives.
Consumer prices rose 1.5 percent in January from a year earlier, the third straight advance. Weakness in Europe Foreign companies are relying on growth in emerging economies such as China to prop up earnings as unemployment restrains U.S. demand and the Greek debt crisis highlights weakness in Europe. London-based Rio Tinto Group, the world’s second-biggest iron-ore producer, said last week that China became its largest single market in 2009. The Asian nation supplanted Germany as the world’s biggest exporter last year and is poised to replace Japan as the No. 2 economy behind the U.S. in 2010.
“The Chinese authorities are clearly trying to bring excessive bank lending under control,” Stephen Roach, the chairman of Morgan Stanley Asia Ltd., said in an interview in Mumbai on Feb. 12. The rest of the world should “take a lesson from what China is doing in moving much more aggressively to adapt to the post-crisis exit strategy.” Holiday Cash The central bank on Jan. 12 increased reserve requirements for the first time since June 2008. The latest move was triggered by the need to soak up money from maturing central- bank bills and cash added to the financial system for this week’s Lunar New Year holiday, according to China International Capital Corp., the top brokerage for China research based on a 2009 survey by Asiamoney magazine.
The central bank aims to “gradually guide monetary conditions back to normal levels” from the “crisis mode” that saw an unprecedented 9.59 trillion yuan of lending in 2009, officials said in a Feb. 11 report. Inflows of overseas capital, which helped push foreign-exchange reserves to a record $2.4 trillion in December, are complicating efforts to prevent the fastest-growing major economy from overheating. The central bank may increase reserve requirements by another 1.5 percentage points this year on top of the latest 0.5 point increase, according to Merrill’s Lu. Benchmark interest rates may rise in the second half of the year, he said.
Yuan, Interest Rates “There is a case for an early interest-rate hike, possibly as soon as March, in order to keep inflation expectations in check,” said Mark Williams, an economist at Capital Economics in London who worked at the U.K. Treasury as an adviser on China from 2005 to 2007. The reserve-ratio move was accompanied by speculation that the government could also loosen the peg that has kept the yuan at about 6.83 per dollar since July 2008, shielding the nation’s exporters from weakness in global demand. U.S. President Barack Obama said in a Feb. 9 interview with Bloomberg BusinessWeek that a stronger currency would help China to deal with “a bunch of bubbles” in its “potentially overheating” economy.
Yuan forwards indicate that the Chinese currency may appreciate 2.3 percent against the dollar in the next year. “I have a strong opinion that they’re close to moving the exchange rate,” Jim O’Neill, London-based chief global economist at Goldman Sachs, said in an interview on Feb. 12. “I think something’s brewing.” O’Neill, who coined the terms BRICs in 2001 for the fast- growing economies of Brazil, Russia, India and China, said that Chinese policy objectives were shifting to keeping inflation under control and the odds had increased of a one-off revaluation of the currency. The reserve-ratio increase signals that “they’re getting better at bubble prevention,” he said.
Source: Bloomberg
China’s economy, the world’s third biggest, may expand at a faster pace in 2010 even as officials cool lending to restrain inflation and avert asset bubbles. Goldman Sachs Group Inc. maintained its forecast for 11.4 percent growth after the central bank raised reserve requirements for lenders on Feb. 12. That compares with an 8.7 percent expansion last year. Declines in stocks and commodities because of the reserve- ratio announcement highlighted concern that monetary tightening in China may trigger a slowdown that undermines the global recovery.
Rebounding exports, up for a second month in January, may boost a Chinese economy that last year depended on its own stimulus-fueled investment and consumption for growth. “The Chinese economy is in good shape and exports will be the biggest swing factor this year,” said Lu Ting, a Hong Kong-based economist for Bank of America-Merrill Lynch.
“Outside of China, people underestimate the government’s ability to manage the economy and the stimulus exit.” Merrill forecasts 10.1 percent growth and Capital Economics Ltd. sees a 10 percent gain, estimates unchanged from before the reserve-ratio announcement that takes effect Feb. 25. The Chinese central bank moved after banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) target for lending in January and property prices climbed the most in 21 months. Since October, policy makers have said managing inflation expectations is one of the government’s key objectives.
Consumer prices rose 1.5 percent in January from a year earlier, the third straight advance. Weakness in Europe Foreign companies are relying on growth in emerging economies such as China to prop up earnings as unemployment restrains U.S. demand and the Greek debt crisis highlights weakness in Europe. London-based Rio Tinto Group, the world’s second-biggest iron-ore producer, said last week that China became its largest single market in 2009. The Asian nation supplanted Germany as the world’s biggest exporter last year and is poised to replace Japan as the No. 2 economy behind the U.S. in 2010.
“The Chinese authorities are clearly trying to bring excessive bank lending under control,” Stephen Roach, the chairman of Morgan Stanley Asia Ltd., said in an interview in Mumbai on Feb. 12. The rest of the world should “take a lesson from what China is doing in moving much more aggressively to adapt to the post-crisis exit strategy.” Holiday Cash The central bank on Jan. 12 increased reserve requirements for the first time since June 2008. The latest move was triggered by the need to soak up money from maturing central- bank bills and cash added to the financial system for this week’s Lunar New Year holiday, according to China International Capital Corp., the top brokerage for China research based on a 2009 survey by Asiamoney magazine.
The central bank aims to “gradually guide monetary conditions back to normal levels” from the “crisis mode” that saw an unprecedented 9.59 trillion yuan of lending in 2009, officials said in a Feb. 11 report. Inflows of overseas capital, which helped push foreign-exchange reserves to a record $2.4 trillion in December, are complicating efforts to prevent the fastest-growing major economy from overheating. The central bank may increase reserve requirements by another 1.5 percentage points this year on top of the latest 0.5 point increase, according to Merrill’s Lu. Benchmark interest rates may rise in the second half of the year, he said.
Yuan, Interest Rates “There is a case for an early interest-rate hike, possibly as soon as March, in order to keep inflation expectations in check,” said Mark Williams, an economist at Capital Economics in London who worked at the U.K. Treasury as an adviser on China from 2005 to 2007. The reserve-ratio move was accompanied by speculation that the government could also loosen the peg that has kept the yuan at about 6.83 per dollar since July 2008, shielding the nation’s exporters from weakness in global demand. U.S. President Barack Obama said in a Feb. 9 interview with Bloomberg BusinessWeek that a stronger currency would help China to deal with “a bunch of bubbles” in its “potentially overheating” economy.
Yuan forwards indicate that the Chinese currency may appreciate 2.3 percent against the dollar in the next year. “I have a strong opinion that they’re close to moving the exchange rate,” Jim O’Neill, London-based chief global economist at Goldman Sachs, said in an interview on Feb. 12. “I think something’s brewing.” O’Neill, who coined the terms BRICs in 2001 for the fast- growing economies of Brazil, Russia, India and China, said that Chinese policy objectives were shifting to keeping inflation under control and the odds had increased of a one-off revaluation of the currency. The reserve-ratio increase signals that “they’re getting better at bubble prevention,” he said.
Source: Bloomberg
Wednesday 10 February 2010
Branson warns that oil crunch is coming within five years
Tuesday, 09 February 2010
Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years. The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ¬coming crisis could be even more serious than the credit crunch.
"The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.
"Our message to government and businesses is clear: act," he says in a foreword to a new report on the crisis. "Don't let the oil crunch catch us out in the way that the credit crunch did."
Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach.
Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called "peak oil" to avoid panic on the stock markets.
Ministers have until now refused to take predictions of oil droughts seriously, preferring to side with oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist there is nothing to worry about.
But there are signs this is about to change, according to Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak oil taskforce within the business community. "[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest."
The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. "The problem of peak oil remains."
Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis: "The next major supply constraint, along with spiking oil prices, will not occur until recession-hit demand grows to the point that it removes the current excess oil stocks and the large spare capacity held by Opec. However, once these are removed, possibly as early as 2012-13 and no later than 2014-15, oil prices are likely to spike, imperilling economic growth and causing economic dislocation."
Skrebowski believes that Britain is particularly vulnerable because it has gone from being a net exporter of oil, gas and coal to being an importer, and is becoming increasingly exposed to competition for supplies.
"This is likely to put pressure on the UK balance of payments and in a world of floating exchange rates is also likely to put downward pressure on the valuation of sterling. In other words, the positive benefits to the valuation of the pound as a petrocurrency are now eroding," he said.
The question of peak oil came to centre stage last November when a whistleblower told the Guardian the figures provided by the IEA – and used by the UK and US governments for much of their planning scenarios – were inaccurate.
"The IEA in 2005 was predicting that oil supplies could rise as high as 120m barrels a day by 2030, although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."
But Saudi Arabia launched a counter-strike at Davos, insisting the issue was overblown. "The concern about peak oil is behind us," said Khalid al-Falih, chief executive of Saudi Aramco.
Tony Hayward, the BP chief executive, downplayed fears about dwindling supplies in an interview with the Guardian last week.
Source: Guardian
Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years. The founder of the Virgin group, whose rail, airline and travel companies are sensitive to energy prices, will say that the ¬coming crisis could be even more serious than the credit crunch.
"The next five years will see us face another crunch – the oil crunch. This time, we do have the chance to prepare. The challenge is to use that time well," Branson will say.
"Our message to government and businesses is clear: act," he says in a foreword to a new report on the crisis. "Don't let the oil crunch catch us out in the way that the credit crunch did."
Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach.
Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organisation had deliberately underplayed the threat of so-called "peak oil" to avoid panic on the stock markets.
Ministers have until now refused to take predictions of oil droughts seriously, preferring to side with oil companies such as BP and ExxonMobil and crude producers such as the Saudis, who insist there is nothing to worry about.
But there are signs this is about to change, according to Jeremy Leggett, founder of the Solarcentury renewable power company and a member of a peak oil taskforce within the business community. "[We are] in regular contact with government; we have reason to believe their risk thinking on peak oil may be evolving away from BP et al's and we await the results of further consultations with keen interest."
The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. "The problem of peak oil remains."
Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis: "The next major supply constraint, along with spiking oil prices, will not occur until recession-hit demand grows to the point that it removes the current excess oil stocks and the large spare capacity held by Opec. However, once these are removed, possibly as early as 2012-13 and no later than 2014-15, oil prices are likely to spike, imperilling economic growth and causing economic dislocation."
Skrebowski believes that Britain is particularly vulnerable because it has gone from being a net exporter of oil, gas and coal to being an importer, and is becoming increasingly exposed to competition for supplies.
"This is likely to put pressure on the UK balance of payments and in a world of floating exchange rates is also likely to put downward pressure on the valuation of sterling. In other words, the positive benefits to the valuation of the pound as a petrocurrency are now eroding," he said.
The question of peak oil came to centre stage last November when a whistleblower told the Guardian the figures provided by the IEA – and used by the UK and US governments for much of their planning scenarios – were inaccurate.
"The IEA in 2005 was predicting that oil supplies could rise as high as 120m barrels a day by 2030, although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."
But Saudi Arabia launched a counter-strike at Davos, insisting the issue was overblown. "The concern about peak oil is behind us," said Khalid al-Falih, chief executive of Saudi Aramco.
Tony Hayward, the BP chief executive, downplayed fears about dwindling supplies in an interview with the Guardian last week.
Source: Guardian
Pareto Securities updates stance on Oslo-listed shipping companies
Thursday, 11 February 2010
Pareto Securities has adjusted the price targets and recommendations on a number of Oslo-listed shipping stocks in a recent note to customers. The broker cut its recommendation on tanker operator Frontline Ltd and on Jinhui Shipping and Transportation Ltd (OSL: JIN) to "hold" from "buy". The share price target on Frontline was reduced to NOK150 from NOK200, while the target on Jinhui Shipping was set at NOK28.
Dry-bulk carrier Golden Ocean Group Ltd (OSL: GOGL) and Eitzen Chemical ASA (OSL: ECHEM) got the "sell" rating confirmed.
The price target on Golden Ocean was raised to NOK7.00 from NOK6.50, while the target of NOK1.30 on Eitzen Chemical was maintained.
The stock in shipping company Wilson ASA (OSL: WILS) was downgraded to "sell" from "hold", at the same time as the price target was cut to NOK13 from NOK16.
The shares in Frontline closed at NOK153.40, down 1.67% on the day on Monday on the Oslo Stock Exchange.
The stock in Jinhui Shipping and Transportation was last traded at NOK23.90, down 4.40% and the share in Golden Ocean Group -- at NOK10.25, down 2.94%.
The shares in Eitzen Chemical lost 2.91% to NOK1.67.
The stock in Wilson was last traded at NOK17.50, no change in the quotation occurring on the day.
Source: Nordic Business Report
Pareto Securities has adjusted the price targets and recommendations on a number of Oslo-listed shipping stocks in a recent note to customers. The broker cut its recommendation on tanker operator Frontline Ltd and on Jinhui Shipping and Transportation Ltd (OSL: JIN) to "hold" from "buy". The share price target on Frontline was reduced to NOK150 from NOK200, while the target on Jinhui Shipping was set at NOK28.
Dry-bulk carrier Golden Ocean Group Ltd (OSL: GOGL) and Eitzen Chemical ASA (OSL: ECHEM) got the "sell" rating confirmed.
The price target on Golden Ocean was raised to NOK7.00 from NOK6.50, while the target of NOK1.30 on Eitzen Chemical was maintained.
The stock in shipping company Wilson ASA (OSL: WILS) was downgraded to "sell" from "hold", at the same time as the price target was cut to NOK13 from NOK16.
The shares in Frontline closed at NOK153.40, down 1.67% on the day on Monday on the Oslo Stock Exchange.
The stock in Jinhui Shipping and Transportation was last traded at NOK23.90, down 4.40% and the share in Golden Ocean Group -- at NOK10.25, down 2.94%.
The shares in Eitzen Chemical lost 2.91% to NOK1.67.
The stock in Wilson was last traded at NOK17.50, no change in the quotation occurring on the day.
Source: Nordic Business Report
Monday 8 February 2010
Oil may reach $200 a barrel
It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel.
The global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China, India and Indonesia look like powering ahead at 12%, 9% and 6% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development. Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too.
Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward. China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Indonesia, Brazil, Mexico and Africa are in deep waters that will take time to exploit. Although Indonesia for example has started an ambitious project to increase its oil production from current mere 900k barrel per day to 1,000k barrel per day and has started offering offshore projects to oil majors, we still need to wait until such projects generate the much needed oil for consumption.
We now and will face another huge energy crunch, and need to adjust to that reality too.
There will be a shift to the usage of bio-related energy: biofuel, biodiesels, bioetahnol and other green products and this are imposed-driven usage by the relevant governments. There will be a growth in edible oil and vegetable oil markets. There will also be a move towards energy conservation e.g. farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
The global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China, India and Indonesia look like powering ahead at 12%, 9% and 6% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development. Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too.
Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward. China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Indonesia, Brazil, Mexico and Africa are in deep waters that will take time to exploit. Although Indonesia for example has started an ambitious project to increase its oil production from current mere 900k barrel per day to 1,000k barrel per day and has started offering offshore projects to oil majors, we still need to wait until such projects generate the much needed oil for consumption.
We now and will face another huge energy crunch, and need to adjust to that reality too.
There will be a shift to the usage of bio-related energy: biofuel, biodiesels, bioetahnol and other green products and this are imposed-driven usage by the relevant governments. There will be a growth in edible oil and vegetable oil markets. There will also be a move towards energy conservation e.g. farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
Sunday 7 February 2010
Indonesian shipping company brings $100 million CB
05 Feb 2010
Berlian Laju Tanker replenishes its coffers ahead of an expected convertible put in May and as it pursues the acquisition of a Norwegian liquid tanker company. Berlian Laju Tanker (BLT), a small-cap Indonesian shipping company, has raised $100 million from a five-year convertible bond that was well received by investors. The company is a true high-yield issuer -- it has a credit spread closer to 2,000bp than 1,000bp and a B rating from Standard & Poor's and Fitch -- and the shipping sector is still clouded by uncertainty, but the downside protection offered by the CB appeared to provide enough comfort to get investors to open their purse strings.
It would have helped, however, that the conversion premium was set at a modest 10% and there is a one-time reset after six months. The conversion premium and the coupon were both fixed at best terms for investors, in light of the fact that the orders were price sensitive.Even so, it is not a bad effort for a company with a market capitalisation of about $425 million to pull off a $100 million CB. According to a source, the deal was well oversubscribed at the original deal size of $75 million, allowing the bookrunners to exercise half of the available upsize option and increase the deal to $100 million.
Despite the upsize, the CB traded up to about 102 in late Asian trade yesterday and the share price also fared well, gaining 1.5% to Rs680.Slightly more than half of the demand came from Europe, with Asian investors contributing the rest. The split between outright and hedge fund investors was about 60:40, although with the CB being virtually unhedgeable, it is fair to assume that it was BLT's equity prospects that drove buyers' investment decisions, rather than the technical aspects of the bonds.Berlian Laju Tanker is in the process of trying to acquire Norwegian shipping company Camillo Eitzen & Co. If the transaction is successful, the deal would be transformational for BLT both in terms of size and improved business access. A liquid cargo specialist, BLT is already one of the largest chemical tanker operators in the world with a fleet that comprises 63 chemical tankers (plus 10 new-builds), 14 oil tankers and 13 gas tankers (plus four new-builds), according to an earlier filing by BLT. However, Camillo too is one of the largest owners of chemical ships in the world based on number of vessels, and also operates in other segments of the gas, bulk and tanker markets.Aside from this acquisition, BLT also has a need to raise fresh capital to cover the expected put in May of an outstanding $125 million CB, which is currently out-of-the-money.
The new CB was offered with a coupon between 10% and 12%, which was later fixed at 12%. The deal has a par-in, par-out structure, which means the coupon and then yield are the same. The premium was offered at 10% to 15%, and fixed at 10% over Tuesday's closing price of Rs670. Aside from the fact that it makes the deal more palatable to investors, the low premium was also a result of company wanting a deal that was as equity-like as possible. BLT had earlier indicated that it wanted to fund the Norwegian acquisition with an exchangeable that would be mandatorily converted into shares, but the regulators said no to that kind of structure
The bonds have a five-year maturity, but can be put back to the issuer after three years. There is also an issuer call after three years, subject to a 130% trigger.If the share price (specifically the volume-weighted average price) is trading below the conversion price six months after the closing of the deal, the conversion price will be reset to correspond to the market price, which is defined as the VWAP in the 20 days leading up to the six-month date. The reset cannot go below 80% of the conversion price at the time.
The CB was marketed with a credit spread of 1,600bp to 1,700bp, which was partly based on the spread of BLT's outstanding high-yield bond due 2014. Other assumptions included a 5% stock borrow cost and protection for dividend yields above 0.75%.According to the source, this gave a bond floor of about 85% and an implied volatility of 25%, numbers which were arrived at after taking the reset feature into account.J.P. Morgan was a joint bookrunner on the transaction together with RS Platou Markets. The latter firm is also acting as a financial adviser to BLT with respect to the acquisition of Camillo.
Source: Finance Asia
Berlian Laju Tanker replenishes its coffers ahead of an expected convertible put in May and as it pursues the acquisition of a Norwegian liquid tanker company. Berlian Laju Tanker (BLT), a small-cap Indonesian shipping company, has raised $100 million from a five-year convertible bond that was well received by investors. The company is a true high-yield issuer -- it has a credit spread closer to 2,000bp than 1,000bp and a B rating from Standard & Poor's and Fitch -- and the shipping sector is still clouded by uncertainty, but the downside protection offered by the CB appeared to provide enough comfort to get investors to open their purse strings.
It would have helped, however, that the conversion premium was set at a modest 10% and there is a one-time reset after six months. The conversion premium and the coupon were both fixed at best terms for investors, in light of the fact that the orders were price sensitive.Even so, it is not a bad effort for a company with a market capitalisation of about $425 million to pull off a $100 million CB. According to a source, the deal was well oversubscribed at the original deal size of $75 million, allowing the bookrunners to exercise half of the available upsize option and increase the deal to $100 million.
Despite the upsize, the CB traded up to about 102 in late Asian trade yesterday and the share price also fared well, gaining 1.5% to Rs680.Slightly more than half of the demand came from Europe, with Asian investors contributing the rest. The split between outright and hedge fund investors was about 60:40, although with the CB being virtually unhedgeable, it is fair to assume that it was BLT's equity prospects that drove buyers' investment decisions, rather than the technical aspects of the bonds.Berlian Laju Tanker is in the process of trying to acquire Norwegian shipping company Camillo Eitzen & Co. If the transaction is successful, the deal would be transformational for BLT both in terms of size and improved business access. A liquid cargo specialist, BLT is already one of the largest chemical tanker operators in the world with a fleet that comprises 63 chemical tankers (plus 10 new-builds), 14 oil tankers and 13 gas tankers (plus four new-builds), according to an earlier filing by BLT. However, Camillo too is one of the largest owners of chemical ships in the world based on number of vessels, and also operates in other segments of the gas, bulk and tanker markets.Aside from this acquisition, BLT also has a need to raise fresh capital to cover the expected put in May of an outstanding $125 million CB, which is currently out-of-the-money.
The new CB was offered with a coupon between 10% and 12%, which was later fixed at 12%. The deal has a par-in, par-out structure, which means the coupon and then yield are the same. The premium was offered at 10% to 15%, and fixed at 10% over Tuesday's closing price of Rs670. Aside from the fact that it makes the deal more palatable to investors, the low premium was also a result of company wanting a deal that was as equity-like as possible. BLT had earlier indicated that it wanted to fund the Norwegian acquisition with an exchangeable that would be mandatorily converted into shares, but the regulators said no to that kind of structure
The bonds have a five-year maturity, but can be put back to the issuer after three years. There is also an issuer call after three years, subject to a 130% trigger.If the share price (specifically the volume-weighted average price) is trading below the conversion price six months after the closing of the deal, the conversion price will be reset to correspond to the market price, which is defined as the VWAP in the 20 days leading up to the six-month date. The reset cannot go below 80% of the conversion price at the time.
The CB was marketed with a credit spread of 1,600bp to 1,700bp, which was partly based on the spread of BLT's outstanding high-yield bond due 2014. Other assumptions included a 5% stock borrow cost and protection for dividend yields above 0.75%.According to the source, this gave a bond floor of about 85% and an implied volatility of 25%, numbers which were arrived at after taking the reset feature into account.J.P. Morgan was a joint bookrunner on the transaction together with RS Platou Markets. The latter firm is also acting as a financial adviser to BLT with respect to the acquisition of Camillo.
Source: Finance Asia
Friday 5 February 2010
New chief of Malaysia Petronas faces test of mettle
CAPITALS: The chief of Malaysia''s national energy giant Petronas is under pressure to prove he is more than an interim replacement for the respected and fiercely independent Hassan Marican who built it into a Fortune 100 company.
New Chief Executive Officer (CEO) Shamsul Azhar Abbas faces increasing government demands on the company''s coffers and from Malaysia''s oilـrich states for a share of revenues, but must also bolster global investments to fill declining domestic output, analysts say.The 57ـyearـold Britainـtrained former oil trader, who retired in 2009 after five years as Managing Director of shipping arm Malaysia International Shipping Corporation (MISC), will be chief executive and acting chairman of the board.
Malaysian media said the contract could be a brief one, while sources said it is normally on a threeـyear renewable basis, although Hassan held office since 1995.Other industry sources said the governmentـdriven succession planning process will continue, even as the company''s global business strategy stays intact.
"What we still have not heard about is how long his contract is going to be, which will be important as an indication of whether he will pursue his own strategy or will simply be a placeholder for the next man," said David Kiu, analyst at Eurasia Group.Petronas is the top contributor to the government''s budget, accounting for around half the country''s revenues.
"The company may be under intense pressure to give more as the government aims to trim its deficit, the deepest in more than 20 years in 2009 after dishing out significant fiscal stimulus packages," said Victor Shum from Purvin and Gertz."Indeed, Shamsul looks a safe choice ـ a Petronas man having had a long career with the company and having been in leadership positions in all key operating segments," said Shum.
"Considering Shamsul''s age, he certainly won''t be CEO for 15 years like Hassan. It looks like succession planning for a CEO will remain in high gear."Hassan in recent years had successfully campaigned for the government to cut fuel subsidies that have strained the company. He had also fretted over the need to invest more in technology, staff and global acquisitions to vie with equally ambitious countries such as China, South Korea, Japan and India.
"The key question is about the tension between running Petronas as a profitable company and using Petronas as an instrument for state policy," Kiu said.Question of independenceLeading up to the replacement of Hassan, who had run Petronas without much state encroachment in its decisionـmaking strategy in his 15 years as CEO, was the board''s move to block the appointment of one of the Prime Minister''s advisers as director.
One industry source familiar with Petronas said even if Premier Najib Razak were seen to be grooming the adviser, Oxfordـtrained Omar Mustapha, for the top job, this would take years since he is only 38 years old, though Hassan was 42 when he became CEO in 1995.Omar was appointed an independent, nonـexecutive director of Petronas last year.In the immediate future, the source said, there are concerns that Hassan''s top management team could also see some changes, including the post of chief financial officer.
Despite the issues of transition, industry sources said they did not think that Petronas debt, rated as a standalone entity by Standard and Poor''s, would be lowered from "AAـminus"."On the one hand, there will be changes to senior management who are more in line with the current climate while on the other, Petronas will also have to satisfy its bondholders that the new people are as capable as the previous ones, which are highly regarded," the source said.
Some analysts said while the issue of Omar''s appointment to the board could have soured ties between Hassan and Najib, Kiu said he did not see the Westernـoriented Shamsul, "bending over backwards for the government either".Analysts also pointed to his vast experience within Petronas since 1974, on a fastـtrack career which has carried him to several senior posts since his early 30s.
These included vice president of the international oil business, Vice President Petrochemicals, Vice President Exploration Upstream and Vice President Maritime and Logistics."The global strategy is crucial for Petronas in tackling the many challenges it faces," said Shum."These include reserves replacement in a very competitive climate, with major national oil companies and international oil firms competing for resources, refining and petrochemical profitability in a struggling economy and recruiting, training as well as retaining vast human resources," he added.
Analysts said Shamsul may also have to decide the role that Malaysia, the world''s 14th biggest gas producer, must play if it were invited to the Gas Exporters Forum, a group of 11 gas producers controlling nearly 70 percent of the world''s reserves.The loose group of pipeline gas and Liquefied natural gas (LNG) exporting countries is facing the first global drop in demand at a time when new production plants are coming onـstream to serve a US market that has lost interest.ـ
Reuters
New Chief Executive Officer (CEO) Shamsul Azhar Abbas faces increasing government demands on the company''s coffers and from Malaysia''s oilـrich states for a share of revenues, but must also bolster global investments to fill declining domestic output, analysts say.The 57ـyearـold Britainـtrained former oil trader, who retired in 2009 after five years as Managing Director of shipping arm Malaysia International Shipping Corporation (MISC), will be chief executive and acting chairman of the board.
Malaysian media said the contract could be a brief one, while sources said it is normally on a threeـyear renewable basis, although Hassan held office since 1995.Other industry sources said the governmentـdriven succession planning process will continue, even as the company''s global business strategy stays intact.
"What we still have not heard about is how long his contract is going to be, which will be important as an indication of whether he will pursue his own strategy or will simply be a placeholder for the next man," said David Kiu, analyst at Eurasia Group.Petronas is the top contributor to the government''s budget, accounting for around half the country''s revenues.
"The company may be under intense pressure to give more as the government aims to trim its deficit, the deepest in more than 20 years in 2009 after dishing out significant fiscal stimulus packages," said Victor Shum from Purvin and Gertz."Indeed, Shamsul looks a safe choice ـ a Petronas man having had a long career with the company and having been in leadership positions in all key operating segments," said Shum.
"Considering Shamsul''s age, he certainly won''t be CEO for 15 years like Hassan. It looks like succession planning for a CEO will remain in high gear."Hassan in recent years had successfully campaigned for the government to cut fuel subsidies that have strained the company. He had also fretted over the need to invest more in technology, staff and global acquisitions to vie with equally ambitious countries such as China, South Korea, Japan and India.
"The key question is about the tension between running Petronas as a profitable company and using Petronas as an instrument for state policy," Kiu said.Question of independenceLeading up to the replacement of Hassan, who had run Petronas without much state encroachment in its decisionـmaking strategy in his 15 years as CEO, was the board''s move to block the appointment of one of the Prime Minister''s advisers as director.
One industry source familiar with Petronas said even if Premier Najib Razak were seen to be grooming the adviser, Oxfordـtrained Omar Mustapha, for the top job, this would take years since he is only 38 years old, though Hassan was 42 when he became CEO in 1995.Omar was appointed an independent, nonـexecutive director of Petronas last year.In the immediate future, the source said, there are concerns that Hassan''s top management team could also see some changes, including the post of chief financial officer.
Despite the issues of transition, industry sources said they did not think that Petronas debt, rated as a standalone entity by Standard and Poor''s, would be lowered from "AAـminus"."On the one hand, there will be changes to senior management who are more in line with the current climate while on the other, Petronas will also have to satisfy its bondholders that the new people are as capable as the previous ones, which are highly regarded," the source said.
Some analysts said while the issue of Omar''s appointment to the board could have soured ties between Hassan and Najib, Kiu said he did not see the Westernـoriented Shamsul, "bending over backwards for the government either".Analysts also pointed to his vast experience within Petronas since 1974, on a fastـtrack career which has carried him to several senior posts since his early 30s.
These included vice president of the international oil business, Vice President Petrochemicals, Vice President Exploration Upstream and Vice President Maritime and Logistics."The global strategy is crucial for Petronas in tackling the many challenges it faces," said Shum."These include reserves replacement in a very competitive climate, with major national oil companies and international oil firms competing for resources, refining and petrochemical profitability in a struggling economy and recruiting, training as well as retaining vast human resources," he added.
Analysts said Shamsul may also have to decide the role that Malaysia, the world''s 14th biggest gas producer, must play if it were invited to the Gas Exporters Forum, a group of 11 gas producers controlling nearly 70 percent of the world''s reserves.The loose group of pipeline gas and Liquefied natural gas (LNG) exporting countries is facing the first global drop in demand at a time when new production plants are coming onـstream to serve a US market that has lost interest.ـ
Reuters
Thursday 4 February 2010
Berlian Tanker plan to issue US$100 million convertible bonds
PT Berlian Laju Tanker Tbk offered convertible bonds with US$100 million guarantee with 5 years tenure and 12 percent yield per year to finance investment along the enactment of cabotage tenets in Indonesia.Berlian Laju has assigned J.P. Morgan and RS Platou Markets AS to execute direct private placement of the US$100 million convertible bonds maturing in 2015.
Finance Director of Berlian Laju Kevin Wong said the convertible bonds here will be issued at 100 percent value of the outstanding value and the close bookbuilding on February 10, 2010."The bond holders will have put option executable after three years on the closing bookbuilding," he said yesterday.
The early conversion price of the convertible bonds was IDR737 (assuming US$1=IDR9,362) and conversion premium of 10 percent above the reference share price or at IDR670.If the arithmetic average of the volume average above the ordinary stock price of the corporate within 20 days of trade prior to the six months after reset reference price is lower than the conversion price, the conversion price will be adjusted down to the reset reference price."But the adjustment is on any condition not under 80 percent of the conversion price."
The corporate official statement said the convertible bonds is convertible at any time after 41 days of the closing date up through to 10 days prior to due date and will be converted into ordinary stocks listed at the IDX as corporate equity.The fund from private placement will be allotted, among the other things, for investment for the more expansive implementation of cabotage tenet in Indonesia.
Cabotage tenet is the obligation for the transportation ship owner to use Indonesian flagged ship starting from January 1, 2010."Berlian Laju is on position to get profit from long term relation involving the company and Pertamina and other oil and gas operators to get contractual additional business," said Kevin.The fund could serve as the payment or debt buyback including the floating convertible bonds which are guaranteed by the company.
Head of Debt Capital Market of PT BNI Securities Sukartono said the bond coupon of Berlian Laju is very high and thus the corporate bonds should be sold out."However, on the other hand market players questioned the very high bond coupon up to 12 percent. what is behind the very high bond coupon?" he said.
Yesterday, the BLTA stock price rose 1.49 percent into IDR680.
Finance Director of Berlian Laju Kevin Wong said the convertible bonds here will be issued at 100 percent value of the outstanding value and the close bookbuilding on February 10, 2010."The bond holders will have put option executable after three years on the closing bookbuilding," he said yesterday.
The early conversion price of the convertible bonds was IDR737 (assuming US$1=IDR9,362) and conversion premium of 10 percent above the reference share price or at IDR670.If the arithmetic average of the volume average above the ordinary stock price of the corporate within 20 days of trade prior to the six months after reset reference price is lower than the conversion price, the conversion price will be adjusted down to the reset reference price."But the adjustment is on any condition not under 80 percent of the conversion price."
The corporate official statement said the convertible bonds is convertible at any time after 41 days of the closing date up through to 10 days prior to due date and will be converted into ordinary stocks listed at the IDX as corporate equity.The fund from private placement will be allotted, among the other things, for investment for the more expansive implementation of cabotage tenet in Indonesia.
Cabotage tenet is the obligation for the transportation ship owner to use Indonesian flagged ship starting from January 1, 2010."Berlian Laju is on position to get profit from long term relation involving the company and Pertamina and other oil and gas operators to get contractual additional business," said Kevin.The fund could serve as the payment or debt buyback including the floating convertible bonds which are guaranteed by the company.
Head of Debt Capital Market of PT BNI Securities Sukartono said the bond coupon of Berlian Laju is very high and thus the corporate bonds should be sold out."However, on the other hand market players questioned the very high bond coupon up to 12 percent. what is behind the very high bond coupon?" he said.
Yesterday, the BLTA stock price rose 1.49 percent into IDR680.
BLT Launches and Prices CBs Offering
BLT LAUNCHES AND PRICES OFFERING OF
US$100,000,000 12% GUARANTEED CONVERTIBLE BONDS DUE 2015
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
PT Berlian Laju Tanker Tbk (“Company”) announces that it intends to issue, and has priced its private placement of, US$100 million 12% guaranteed convertible bonds due 2015 (“Convertible Bonds”). The Convertible Bonds will be placed with international professional and institutional investors outside of the United States (the “Private Placement”). The Joint Placement Agents for the Private Placement are J.P. Morgan Securities Ltd and RS Platou Markets AS.
The Convertible Bonds will be issued at 100 per cent of the principal amount and closing is expected to be on or around 10 February 2010 (“Closing Date”). The Convertible Bonds will have a maturity of five years and the holders will have the right to put on a date that falls three years after the Closing Date. The yield to put/maturity will be 12 per cent.
The initial Conversion Price of the Convertible Bonds is IDR 737 (with a fixed IDR/USD exchange rate of IDR 9,362/USD 1.00) and the conversion premium is 10 per cent above Reference Share Price (being the closing price on 02 February 2010 on the Indonesia Stock Exchange) at IDR 670. If the arithmetic average of the volume weighted average price of the Company’s shares for the period of 20 consecutive trading days preceding the date 6 months after the Closing date (“Reset Reference Price”) is less than the Conversion Price then in effect, the Conversion Price will be adjusted downwards to the Reset Reference Price, but in no event below 80% of the Conversion Price then in effect.
The Convertible Bonds will be exercisable at the option of the holders at any time from 41 days after the Closing Date until 10 days before maturity, and shall be convertible into ordinary shares listed on the Indonesia Stock Exchange in the capital of the Company.
The gross proceeds from the Private Placement will be used for, among others, investments in the expanding cabotage trade in Indonesia. BLT is positioned to benefit from the Company’s longstanding relationships with Pertamina and other oil and gas operators in Indonesia to capture additional contract business. The gross proceeds may also be used to repay or redeem existing debt, including outstanding convertible bonds guaranteed by the Company as well as general working capital purposes.
The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the `U.S. Securities Act`), or any state securities laws, and will not be offered to any person investing from or in the United States or to any person acting on behalf of or for the account of such persons. The securities are offered outside the United States in reliance on Regulation S under the U.S. Securities Act. This press release shall not constitute a public offer as defined in Indonesian Capital Market Law, Law No. 8 of 1995 or as an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisidiction in which such offer, solicitation or sale would be unlawful.
Further details of the transaction will be announced in due course when the offering closes.
By Order of the Board
Kevin Wong
Director
Singapore, 2 February 2010
*****
PT Berlian Laju Tanker Tbk
BLT was established in 1981 and is a leading worldwide seaborne liquid cargo transportation specialist and one of the largest chemical tanker operators in the world. The BLT fleet comprises chemical tankers (63 vessels + 10 newbuilds), oil tankers (14 vessels), gas tankers (13 vessels +4 newbuilds) and 1 FPSO. In 2008, BLT had total revenues of USDm 723, an operating profit of USDm 182 and assets totaling USDbn 2.4. BLT is listed on the Indonesian and Singapore Stock Exchange (IDX ticker: BLTA.JK and SGX ticker: PTBL.SI) The company is headquartered in Jakarta (Indonesia) with operational offices in Westport (USA), Singapore, Hong Kong and Glasgow (UK) supported by marketing offices globally.
US$100,000,000 12% GUARANTEED CONVERTIBLE BONDS DUE 2015
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
PT Berlian Laju Tanker Tbk (“Company”) announces that it intends to issue, and has priced its private placement of, US$100 million 12% guaranteed convertible bonds due 2015 (“Convertible Bonds”). The Convertible Bonds will be placed with international professional and institutional investors outside of the United States (the “Private Placement”). The Joint Placement Agents for the Private Placement are J.P. Morgan Securities Ltd and RS Platou Markets AS.
The Convertible Bonds will be issued at 100 per cent of the principal amount and closing is expected to be on or around 10 February 2010 (“Closing Date”). The Convertible Bonds will have a maturity of five years and the holders will have the right to put on a date that falls three years after the Closing Date. The yield to put/maturity will be 12 per cent.
The initial Conversion Price of the Convertible Bonds is IDR 737 (with a fixed IDR/USD exchange rate of IDR 9,362/USD 1.00) and the conversion premium is 10 per cent above Reference Share Price (being the closing price on 02 February 2010 on the Indonesia Stock Exchange) at IDR 670. If the arithmetic average of the volume weighted average price of the Company’s shares for the period of 20 consecutive trading days preceding the date 6 months after the Closing date (“Reset Reference Price”) is less than the Conversion Price then in effect, the Conversion Price will be adjusted downwards to the Reset Reference Price, but in no event below 80% of the Conversion Price then in effect.
The Convertible Bonds will be exercisable at the option of the holders at any time from 41 days after the Closing Date until 10 days before maturity, and shall be convertible into ordinary shares listed on the Indonesia Stock Exchange in the capital of the Company.
The gross proceeds from the Private Placement will be used for, among others, investments in the expanding cabotage trade in Indonesia. BLT is positioned to benefit from the Company’s longstanding relationships with Pertamina and other oil and gas operators in Indonesia to capture additional contract business. The gross proceeds may also be used to repay or redeem existing debt, including outstanding convertible bonds guaranteed by the Company as well as general working capital purposes.
The securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the `U.S. Securities Act`), or any state securities laws, and will not be offered to any person investing from or in the United States or to any person acting on behalf of or for the account of such persons. The securities are offered outside the United States in reliance on Regulation S under the U.S. Securities Act. This press release shall not constitute a public offer as defined in Indonesian Capital Market Law, Law No. 8 of 1995 or as an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisidiction in which such offer, solicitation or sale would be unlawful.
Further details of the transaction will be announced in due course when the offering closes.
By Order of the Board
Kevin Wong
Director
Singapore, 2 February 2010
*****
PT Berlian Laju Tanker Tbk
BLT was established in 1981 and is a leading worldwide seaborne liquid cargo transportation specialist and one of the largest chemical tanker operators in the world. The BLT fleet comprises chemical tankers (63 vessels + 10 newbuilds), oil tankers (14 vessels), gas tankers (13 vessels +4 newbuilds) and 1 FPSO. In 2008, BLT had total revenues of USDm 723, an operating profit of USDm 182 and assets totaling USDbn 2.4. BLT is listed on the Indonesian and Singapore Stock Exchange (IDX ticker: BLTA.JK and SGX ticker: PTBL.SI) The company is headquartered in Jakarta (Indonesia) with operational offices in Westport (USA), Singapore, Hong Kong and Glasgow (UK) supported by marketing offices globally.
Wednesday 3 February 2010
Ships scrapping activity to double in 2010 says Clarkson
Wednesday, 03 February 2010
In a positive note for the overcapacity problems of the global fleet, leading research house Clarkson said that total scrapping activity is expected to more than double during 2010, surpassing the 60 million tons mark. During 2009, which also recorded one of the fastest pick up of demolition activity, a total of 29.88 million tons of vessels was scrapped. Lower freight rates and a huge orderbook in most ship types across the industry led many ship owners to scrap their older vessels, in an effort to pave the way for their expected new buildings.
Based on Clarkson figures the 2009 scrapping figures were the highest in a decade as 246 dry bulk carriers were scrapped, together with 188 tankers and 180 container ships. Their average age stood at 29 years old. Just for comparison 2008 saw the scrapping of just 377 ships with a capacity of 13.2 million tons, with an average age of 30.5 years old, a bit higher than those scrapped last year. In fact, most of them leaving the world’s fleet during the last quarter of the year, when the economic crisis broke out, leaving the shipping industry stunned. Scrapping figures from other sources vary, but it seems that approximately 30-35 million tons of shipping capacity left the fleet last year.
According to shipbroker consultants N. Cotzias Ltd., 34.6 million tons of carrying capacity were removed from the market. During the whole of 2009, India got the lion’s share in terms of units acquired with 473 ships, China came in second place with 271 units, Bangladesh was third with 211 units and Turkey finished in fourth place with 105 units. Average prices for the whole year were around the $270 per ton mark and that number includes the price offered by Turkey.It is worth noting that over the last 12 months (and despite the huge increase in ships sold for recycling) prices in all markets have recorded substantial increases: India +43%, Bangladesh +38%, Pakistan +29% and China +43%.
These prices could prompt even more owners around the world to move forward into 2010 with new deals, as many analysts have feared a potential oversupply of tonnage. As Hellenic Shipping News Worldwide earlier reported, the trend set last year in terms of scrapping deals, should be maintained, in order for the market to recapture its balance and together with an increase of trade activity set its sights at higher levels of freight rates and thus earnings for ship owners.
This prediction coming from reputed analysts seems to be verified. Estimates from Cotzias indicate that a rather hefty 1,812 dry bulk carriers are expected for delivery from shipyards during 2010, versus a mere 593 vessels last year, when many owners delayed their deliveries. Newbuilding deliveries are expected to drop back at 1,255 in 2011, before returning at healthier levels with 476 scheduled deliveries in 2012 and 101 in 2013, although there’s still plenty of room for these numbers to increase, as owners could return to placing orders by the second half of 2010. But, at the same time, Clarkson estimated that 2010 could very well be the year when iron ore trade will surpass the 1 billion ton mark, an unprecedented record.
In a positive note for the overcapacity problems of the global fleet, leading research house Clarkson said that total scrapping activity is expected to more than double during 2010, surpassing the 60 million tons mark. During 2009, which also recorded one of the fastest pick up of demolition activity, a total of 29.88 million tons of vessels was scrapped. Lower freight rates and a huge orderbook in most ship types across the industry led many ship owners to scrap their older vessels, in an effort to pave the way for their expected new buildings.
Based on Clarkson figures the 2009 scrapping figures were the highest in a decade as 246 dry bulk carriers were scrapped, together with 188 tankers and 180 container ships. Their average age stood at 29 years old. Just for comparison 2008 saw the scrapping of just 377 ships with a capacity of 13.2 million tons, with an average age of 30.5 years old, a bit higher than those scrapped last year. In fact, most of them leaving the world’s fleet during the last quarter of the year, when the economic crisis broke out, leaving the shipping industry stunned. Scrapping figures from other sources vary, but it seems that approximately 30-35 million tons of shipping capacity left the fleet last year.
According to shipbroker consultants N. Cotzias Ltd., 34.6 million tons of carrying capacity were removed from the market. During the whole of 2009, India got the lion’s share in terms of units acquired with 473 ships, China came in second place with 271 units, Bangladesh was third with 211 units and Turkey finished in fourth place with 105 units. Average prices for the whole year were around the $270 per ton mark and that number includes the price offered by Turkey.It is worth noting that over the last 12 months (and despite the huge increase in ships sold for recycling) prices in all markets have recorded substantial increases: India +43%, Bangladesh +38%, Pakistan +29% and China +43%.
These prices could prompt even more owners around the world to move forward into 2010 with new deals, as many analysts have feared a potential oversupply of tonnage. As Hellenic Shipping News Worldwide earlier reported, the trend set last year in terms of scrapping deals, should be maintained, in order for the market to recapture its balance and together with an increase of trade activity set its sights at higher levels of freight rates and thus earnings for ship owners.
This prediction coming from reputed analysts seems to be verified. Estimates from Cotzias indicate that a rather hefty 1,812 dry bulk carriers are expected for delivery from shipyards during 2010, versus a mere 593 vessels last year, when many owners delayed their deliveries. Newbuilding deliveries are expected to drop back at 1,255 in 2011, before returning at healthier levels with 476 scheduled deliveries in 2012 and 101 in 2013, although there’s still plenty of room for these numbers to increase, as owners could return to placing orders by the second half of 2010. But, at the same time, Clarkson estimated that 2010 could very well be the year when iron ore trade will surpass the 1 billion ton mark, an unprecedented record.
Tuesday 2 February 2010
Supertanker rates may jump 75%: broker
Tuesday, 02 February 2010
The cost to move crude oil from the Arabian Gulf to the U.S. Gulf Coast using supertankers may jump 75 percent this year as the fleet declines, according to shipbroker Charles R. Weber Co. Rates on the voyage for very-large crude carriers, or VLCCs, will rise to an average US$21,000 a day from last year's US$12,000, according to Weber, based in Greenwich, Connecticut.The broker said 71 new VLCCs are scheduled to be delivered this year and 75 older ships will be scrapped. There are currently 540 VLCCs in service, according to Weber."The lower level of fleet growth seen on VLCCs will likely help to support rates this year," said George Los, an analyst at Weber. An expanding fleet of medium-sized tankers "is undoubtedly going to cap any gains" in rates for those ships.The number of medium-range tankers, which are used to ship gasoline to the U.S. from the Caribbean and Europe, is projected to rise 11 percent to 1,379 this year from 1,246 in 2009, according to Weber.Rates to use the smaller tankers in the Caribbean market may average US$6,750 a day this year, up 8 percent from US$6,250 a day in 2009, according to Weber.VLCCs, which are primarily used to move crude oil, can carry more than 1.46 million barrels of oil. Medium-range tankers can carry 340,000 to 467,500 barrels of gasoline.Rate increaseVLCC rates for shipments to the U.S. Gulf Coast from the Arabian Gulf stood at Worldscale 70 yesterday, or about US$44,000 a day after fuel costs, according to data from New York-based shipbroker Poten & Partners. The rate fell 69 percent last year from 2008 to an average WS 29.41 as oil demand dropped during the worst global recession since World War II.Worldscale points are a percentage of a nominal rate, or flat rate, published by the Worldscale Association in London.Tanker rates got a boost earlier this month as cold weather delayed shipments and raised demand for heating oil. The rally was "just a seasonal strengthening," Jonathan Chappell, an analyst at JPMorgan Chase & Co., said in a report Jan. 22. Prices are "expected to ease substantially through the spring and summer."Weber estimates a 9.6 percent increase in the fleet of Suezmax tankers, which can carry 876,000 to 1.46 million barrels of crude. The broker said 54 new Suezmax tankers are expected to be delivered this year and 16 may be scrapped.
Source: Bloomberg
The cost to move crude oil from the Arabian Gulf to the U.S. Gulf Coast using supertankers may jump 75 percent this year as the fleet declines, according to shipbroker Charles R. Weber Co. Rates on the voyage for very-large crude carriers, or VLCCs, will rise to an average US$21,000 a day from last year's US$12,000, according to Weber, based in Greenwich, Connecticut.The broker said 71 new VLCCs are scheduled to be delivered this year and 75 older ships will be scrapped. There are currently 540 VLCCs in service, according to Weber."The lower level of fleet growth seen on VLCCs will likely help to support rates this year," said George Los, an analyst at Weber. An expanding fleet of medium-sized tankers "is undoubtedly going to cap any gains" in rates for those ships.The number of medium-range tankers, which are used to ship gasoline to the U.S. from the Caribbean and Europe, is projected to rise 11 percent to 1,379 this year from 1,246 in 2009, according to Weber.Rates to use the smaller tankers in the Caribbean market may average US$6,750 a day this year, up 8 percent from US$6,250 a day in 2009, according to Weber.VLCCs, which are primarily used to move crude oil, can carry more than 1.46 million barrels of oil. Medium-range tankers can carry 340,000 to 467,500 barrels of gasoline.Rate increaseVLCC rates for shipments to the U.S. Gulf Coast from the Arabian Gulf stood at Worldscale 70 yesterday, or about US$44,000 a day after fuel costs, according to data from New York-based shipbroker Poten & Partners. The rate fell 69 percent last year from 2008 to an average WS 29.41 as oil demand dropped during the worst global recession since World War II.Worldscale points are a percentage of a nominal rate, or flat rate, published by the Worldscale Association in London.Tanker rates got a boost earlier this month as cold weather delayed shipments and raised demand for heating oil. The rally was "just a seasonal strengthening," Jonathan Chappell, an analyst at JPMorgan Chase & Co., said in a report Jan. 22. Prices are "expected to ease substantially through the spring and summer."Weber estimates a 9.6 percent increase in the fleet of Suezmax tankers, which can carry 876,000 to 1.46 million barrels of crude. The broker said 54 new Suezmax tankers are expected to be delivered this year and 16 may be scrapped.
Source: Bloomberg
Thursday 28 January 2010
Fitch Upgrade the Ratings for 8 Indonesian Banks
Fitch Upgrade the Ratings for 8 Indonesian Banks from BB to BB+.
Those banks include PT Bank Mandiri Tbk, PT Bank Rakyat Indoensia, PT Bank Central Asia Tbk, PT Bank Internatnioal Indonesia Tbk, PT Bank CIMB Niaga Tbk, PT Bank Danamon Indonesia Tbk, PT Bank OCBC NISP Tbk, PT Bank UOB BUana.
Another testament that Indonesia's economy continues to improve even at the back of the severe global crisis.
Those banks include PT Bank Mandiri Tbk, PT Bank Rakyat Indoensia, PT Bank Central Asia Tbk, PT Bank Internatnioal Indonesia Tbk, PT Bank CIMB Niaga Tbk, PT Bank Danamon Indonesia Tbk, PT Bank OCBC NISP Tbk, PT Bank UOB BUana.
Another testament that Indonesia's economy continues to improve even at the back of the severe global crisis.
Indonesia May Be Ready To Join BRICs, Fund Says
Indonesia looks increasingly like a worthy member of the economically enviable “BRIC” group of nations, following this week’s upgrade of its sovereign debt and a nod of recognition from influential global asset manager Templeton Asset Management After boasting Asia’s second-best performing stock market last year, the country may be ready for full-fledged membership in the BRIC group of major emerging nations, Templeton said. “Indonesia’s political and economic outlook has improved tremendously in recent years,” Templeton portfolio manager Dennis Lim wrote in a note on chairman Mark Mobius’s blog.
“So clearly, it would not look out of place beside the BRIC countries.” Inclusion in the category — Brazil, Russia, India and China — coined by Goldman Sachs chief economist Jim O’Neill may increase demand for Indonesian stocks. Investors should “stick with the BRICs,” a group that “tends to outperform in non-recession years,” Morgan Stanley strategists said last week. The Jakarta Composite Index rose 87 percent last year as the country largely skirted the global recession.
President Susilo Bambang Yudhoyono’s re-election in July boosted confidence that he will maintain policies that helped the economy, Southeast Asia’s biggest, expand by more than 6 percent annually in the two years until 2008. Growth may average 6.6 percent over the next five years, Yudhoyono said this month.
On Monday, Fitch Ratings raised Indonesia’s credit ratings to one level below investment grade. The move reflected the country’s economic resilience and an improving balance of payments, said Bank Indonesia Deputy Governor Hartadi Sarwono. Foreign-exchange reserves rose to $69 billion as of last week, he said. BRIC funds are gaining in popularity. “The BRICs theme, which played well in 2009, continues to resonate in early 2010,” according to EPFR Global, a Cambridge, Massachusetts-based funds tracker, on Jan. 21. In the third week of January, “dedicated BRIC equity funds recorded inflows of $182 million, right around their weekly average year-to-date versus the $103 million they averaged last year.”
Source: Bloomberg
“So clearly, it would not look out of place beside the BRIC countries.” Inclusion in the category — Brazil, Russia, India and China — coined by Goldman Sachs chief economist Jim O’Neill may increase demand for Indonesian stocks. Investors should “stick with the BRICs,” a group that “tends to outperform in non-recession years,” Morgan Stanley strategists said last week. The Jakarta Composite Index rose 87 percent last year as the country largely skirted the global recession.
President Susilo Bambang Yudhoyono’s re-election in July boosted confidence that he will maintain policies that helped the economy, Southeast Asia’s biggest, expand by more than 6 percent annually in the two years until 2008. Growth may average 6.6 percent over the next five years, Yudhoyono said this month.
On Monday, Fitch Ratings raised Indonesia’s credit ratings to one level below investment grade. The move reflected the country’s economic resilience and an improving balance of payments, said Bank Indonesia Deputy Governor Hartadi Sarwono. Foreign-exchange reserves rose to $69 billion as of last week, he said. BRIC funds are gaining in popularity. “The BRICs theme, which played well in 2009, continues to resonate in early 2010,” according to EPFR Global, a Cambridge, Massachusetts-based funds tracker, on Jan. 21. In the third week of January, “dedicated BRIC equity funds recorded inflows of $182 million, right around their weekly average year-to-date versus the $103 million they averaged last year.”
Source: Bloomberg
IMF Revised GDP Growth Forecast on Indonesia
IMF has revised the prediction on GDP growth on Indonesia from previous 4.8% to 5.5% for 2010. At the same time, it has also revised China economic growth as well.
Wednesday 27 January 2010
Top 10 product tanker charterers 2009
Clean fixtures rise 16% as spot rates hit bottom
Poten & Partners compiles list of top 10 charterers in 2009
Michelle Wiese Bockmann - Wednesday 27 January 2010
ROCK-bottom freight rates for product tankers saw the number of clean fixtures on the spot market rise by 16% in 2009 to 5,688, based on data from New York-based Poten & Partners.
Even though global demand for oil fell, the total number of fixtures for medium range tankers of between 37,500 dwt and 59,999 dwt actually rose by 22% in 2009 to 66...
Poten & Partners compiles list of top 10 charterers in 2009
Michelle Wiese Bockmann - Wednesday 27 January 2010
ROCK-bottom freight rates for product tankers saw the number of clean fixtures on the spot market rise by 16% in 2009 to 5,688, based on data from New York-based Poten & Partners.
Even though global demand for oil fell, the total number of fixtures for medium range tankers of between 37,500 dwt and 59,999 dwt actually rose by 22% in 2009 to 66...
StealthGas to take hit from Lauritzen resale cancellation
Nigel Lowry - Tuesday 26 January 2010
ATHENS-based StealthGas has confirmed cancellation of its purchase from Denmark’s Lauritzen group of a medium-range chemical product tanker newbuilding.The Greek company said it had engaged in “protracted negotiations with the seller of the Stealth Argentina in regard to various technical deficiencies identified in the design of the ve...
Source: Lloyd's List
ATHENS-based StealthGas has confirmed cancellation of its purchase from Denmark’s Lauritzen group of a medium-range chemical product tanker newbuilding.The Greek company said it had engaged in “protracted negotiations with the seller of the Stealth Argentina in regard to various technical deficiencies identified in the design of the ve...
Source: Lloyd's List
Tuesday 26 January 2010
IMF Revises Up Global Forecast to Near 4% for 2010
Wednesday, 27 January 2010
The global economy, battered by two years of crisis, is recovering faster than previously anticipated, with world growth bouncing back from negative territory in 2009 to a forecast 3.9 percent this year and 4.3 percent in 2011, the International Monetary Fund said in its latest forecast. But the recovery is proceeding at different speeds around the world, with emerging markets, led by Asia relatively vigorous, but advanced economies remaining sluggish and still dependent on government stimulus measures, the IMF said in an update to its World Economic Outlook, published on January 26.
“For the moment, the recovery is very much based on policy decisions and policy actions. The question is when does private demand come and take over. Right now it’s ok, but a year down the line, it will be a big question,” said IMF Chief Economist Olivier Blanchard in an IMF video interview.
IMF Managing Director Dominique Strauss-Kahn has warned that countries risk a return to recession if anti-crisis measures are withdrawn too soon.The IMF said it had revised upwards its earlier forecast for global growth by ¾ percentage point from the October 2009 forecast.Risk appetite returningAlong with the update to its forecast, the IMF also released a new assessment of global financial conditions in its Global Financial Stability Report (GFSR). It said that financial markets have rebounded since the lows of last March, the result of improving economic conditions and wide-ranging policy actions by governments.“Notwithstanding the recent sell-off, risk appetite has returned, equity markets have improved, and capital markets have reopened,” Jose Viñals, Director of the IMF’s Monetary and Capital Markets Department, said.But policymakers still face extraordinary challenges as they seek to unwind the unprecedented fiscal, monetary, and financial support they provided to keep their economies and financial markets from collapsing, the GFSR update pointed out.
Strength of U.S. consumption
The WEO forecast said that in advanced economies, the beginning of a rebuilding of corporate inventories and the unexpected strength of U.S. consumption had contributed to a rebound in confidence, and inflation was expected to remain contained. But high unemployment rates, rising public debt, and, in some countries, weak household balance sheets present further challenges to the recovery.The IMF report said that the varying pace of recovery across countries called for a differentiated response in the unwinding of measures used to stimulated the economy and combat the crisis.
Due to the still-fragile nature of the recovery, fiscal policies need to remain supportive of economic activity in the near term, and the fiscal stimulus planned for 2010 should be implemented fully. However, given growing concerns about fiscal sustainability, countries should also make progress in devising and communicating exit strategies.Financial sector repairCrucially, there remains a pressing need to continue repairing the financial sector in advanced and hardest-hit emerging economies. In these cases, policies are still needed to tackle bank’s impaired assets and restructuring. Unwinding the financial sector support measures gradual; it can be facilitated by incentives that make measures less attractive as conditions improve.
Policymakers will also need to move boldly to reform the financial sector with the objectives of reducing the risks of future instability and rethinking how the potential fallout of financial crises would be borne in the future, while at the same time making the sector more effective and resilient.At the same time, some emerging market countries will have to design policies to manage a surge of capital inflows. Macro-prudential policies can be used to address the potential for bubbles at an early stage by limiting a buildup in risks.
Source: IMF
The global economy, battered by two years of crisis, is recovering faster than previously anticipated, with world growth bouncing back from negative territory in 2009 to a forecast 3.9 percent this year and 4.3 percent in 2011, the International Monetary Fund said in its latest forecast. But the recovery is proceeding at different speeds around the world, with emerging markets, led by Asia relatively vigorous, but advanced economies remaining sluggish and still dependent on government stimulus measures, the IMF said in an update to its World Economic Outlook, published on January 26.
“For the moment, the recovery is very much based on policy decisions and policy actions. The question is when does private demand come and take over. Right now it’s ok, but a year down the line, it will be a big question,” said IMF Chief Economist Olivier Blanchard in an IMF video interview.
IMF Managing Director Dominique Strauss-Kahn has warned that countries risk a return to recession if anti-crisis measures are withdrawn too soon.The IMF said it had revised upwards its earlier forecast for global growth by ¾ percentage point from the October 2009 forecast.Risk appetite returningAlong with the update to its forecast, the IMF also released a new assessment of global financial conditions in its Global Financial Stability Report (GFSR). It said that financial markets have rebounded since the lows of last March, the result of improving economic conditions and wide-ranging policy actions by governments.“Notwithstanding the recent sell-off, risk appetite has returned, equity markets have improved, and capital markets have reopened,” Jose Viñals, Director of the IMF’s Monetary and Capital Markets Department, said.But policymakers still face extraordinary challenges as they seek to unwind the unprecedented fiscal, monetary, and financial support they provided to keep their economies and financial markets from collapsing, the GFSR update pointed out.
Strength of U.S. consumption
The WEO forecast said that in advanced economies, the beginning of a rebuilding of corporate inventories and the unexpected strength of U.S. consumption had contributed to a rebound in confidence, and inflation was expected to remain contained. But high unemployment rates, rising public debt, and, in some countries, weak household balance sheets present further challenges to the recovery.The IMF report said that the varying pace of recovery across countries called for a differentiated response in the unwinding of measures used to stimulated the economy and combat the crisis.
Due to the still-fragile nature of the recovery, fiscal policies need to remain supportive of economic activity in the near term, and the fiscal stimulus planned for 2010 should be implemented fully. However, given growing concerns about fiscal sustainability, countries should also make progress in devising and communicating exit strategies.Financial sector repairCrucially, there remains a pressing need to continue repairing the financial sector in advanced and hardest-hit emerging economies. In these cases, policies are still needed to tackle bank’s impaired assets and restructuring. Unwinding the financial sector support measures gradual; it can be facilitated by incentives that make measures less attractive as conditions improve.
Policymakers will also need to move boldly to reform the financial sector with the objectives of reducing the risks of future instability and rethinking how the potential fallout of financial crises would be borne in the future, while at the same time making the sector more effective and resilient.At the same time, some emerging market countries will have to design policies to manage a surge of capital inflows. Macro-prudential policies can be used to address the potential for bubbles at an early stage by limiting a buildup in risks.
Source: IMF
Monday 25 January 2010
Growth Probably Accelerated as 2009 Ended: U.S. Economy Preview
Monday, 25 January 2010
The U.S. economy probably grew in the closing months of 2009 at the fastest pace in almost four years as factories stepped up production and companies purchased new equipment, economists said before reports this week. Gross domestic product expanded at a 4.6 percent pace from October through December, more than double the prior quarter’s growth rate and the strongest since the first three months of 2006, according to the median estimate of 74 economists surveyed by Bloomberg News. Other reports may show orders for durable goods increased and home sales declined. Manufacturers such as Intel Corp. are leading the recovery as growing demand and dwindling inventories prompt companies to speed up assembly lines. Slower consumer spending after the third-quarter’s “cash for clunkers” rebound is a reminder that 10 percent unemployment is causing Americans to hold back, one reason why the Federal Reserve may keep interest rates low. “Inventories are going to be responsible for at least half of the growth, if not more,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “There’s been an enormous amount of government stimulus that will be fading as we go through the year, so it’s unclear how much the economy can do on its own.” Fed policy makers will do their part to spur growth by keeping borrowing costs near zero after their two-day meeting this week, economists forecast in a Bloomberg survey. Central bankers, who meet Jan. 26-27, may reiterate their pledge to keep rates “exceptionally low” for “an extended period.” Fed Forecast The target rate for overnight lending among banks will stay in a range from zero to 0.25 percent through September before going up by half a point in the fourth quarter, according to the median forecast of economists surveyed earlier this month. The Commerce Department’s first estimate of fourth-quarter GDP is due Jan. 29. The world’s largest economy grew at a 2.2 percent pace from July through September, the first gain in more than a year, after shrinking 3.8 percent in the 12 months to June. That marked the worst recession since the 1930s. Stocks rallied last year on mounting signs the economic slump was ending. The Standard & Poor’s 500 Index climbed 65 percent in 2009 after reaching a 12-year low on March 9. Additional gains in the first part of this month evaporated last week after President Barack Obama proposed limiting risk- taking at banks and as concern grew that China will have to do more to cool its economy. Chip Demand Intel, the world’s largest chipmaker, posted its biggest quarterly revenue in more than a year last quarter, a sign the computer industry has emerged from last year’s global recession. “My expectation for 2010 is that we’re going to see robust unit growth,” Chief Financial Officer Stacy Smith said in an interview this month. “The consumer segments of the market will stay pretty strong, and I do believe we’re going to see a resurgence in PC client sales.” Smaller declines in inventories contributed to growth for a second consecutive quarter as companies picked up the pace of orders, economists said. Stockpiles rose 0.4 percent in November, marking the first back-to-back increase in more than a year. Consumer spending, which accounts for about 70 percent of the economy, probably increased at a 1.8 percent annual rate after rising at a 2.8 percent pace in the previous three months, the GDP report is also projected to show. Third-quarter purchases received a boost from the government’s auto-incentive program that offered buyers discounts to trade in older cars and trucks for new, more fuel- efficient vehicles. The plan expired in August. Business Investment Orders for long-lasting goods probably rose 2 percent in December, economists project the Commerce Department will report Jan. 28. While companies are buying new equipment, they’re reluctant to hire workers. Payrolls fell by 85,000 last month after a 4,000 gain in November that was the first increase in almost two years. The U.S. has lost 7.2 million since the start of the recession in December 2007, the most of any slowdown in the post-World War II era. The jobless rate held at 10 percent in December, the Labor Department said on Jan. 8. A jump in the number of discouraged workers leaving the labor market kept the rate from rising. Property values are showing signs of stabilizing. A report from S&P/Case-Shiller, due Jan. 26, may show home prices in 20 U.S. metropolitan areas declined 5 percent in the year ended in November, the smallest drop since September 2007, according to the survey median. Existing home sales dropped 9.8 percent in December, the month after a government tax credit was originally due to expire, the survey showed ahead of a Jan. 25 report from the National Association of Realtors. Purchases decreased to a 5.9 million pace from 6.54 million the prior month. New-home sales last month rose 4.2 percent to an annual pace of 370,000, according to the survey median before a Commerce Department report on Jan. 27.
Source: Bloomberg
The U.S. economy probably grew in the closing months of 2009 at the fastest pace in almost four years as factories stepped up production and companies purchased new equipment, economists said before reports this week. Gross domestic product expanded at a 4.6 percent pace from October through December, more than double the prior quarter’s growth rate and the strongest since the first three months of 2006, according to the median estimate of 74 economists surveyed by Bloomberg News. Other reports may show orders for durable goods increased and home sales declined. Manufacturers such as Intel Corp. are leading the recovery as growing demand and dwindling inventories prompt companies to speed up assembly lines. Slower consumer spending after the third-quarter’s “cash for clunkers” rebound is a reminder that 10 percent unemployment is causing Americans to hold back, one reason why the Federal Reserve may keep interest rates low. “Inventories are going to be responsible for at least half of the growth, if not more,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “There’s been an enormous amount of government stimulus that will be fading as we go through the year, so it’s unclear how much the economy can do on its own.” Fed policy makers will do their part to spur growth by keeping borrowing costs near zero after their two-day meeting this week, economists forecast in a Bloomberg survey. Central bankers, who meet Jan. 26-27, may reiterate their pledge to keep rates “exceptionally low” for “an extended period.” Fed Forecast The target rate for overnight lending among banks will stay in a range from zero to 0.25 percent through September before going up by half a point in the fourth quarter, according to the median forecast of economists surveyed earlier this month. The Commerce Department’s first estimate of fourth-quarter GDP is due Jan. 29. The world’s largest economy grew at a 2.2 percent pace from July through September, the first gain in more than a year, after shrinking 3.8 percent in the 12 months to June. That marked the worst recession since the 1930s. Stocks rallied last year on mounting signs the economic slump was ending. The Standard & Poor’s 500 Index climbed 65 percent in 2009 after reaching a 12-year low on March 9. Additional gains in the first part of this month evaporated last week after President Barack Obama proposed limiting risk- taking at banks and as concern grew that China will have to do more to cool its economy. Chip Demand Intel, the world’s largest chipmaker, posted its biggest quarterly revenue in more than a year last quarter, a sign the computer industry has emerged from last year’s global recession. “My expectation for 2010 is that we’re going to see robust unit growth,” Chief Financial Officer Stacy Smith said in an interview this month. “The consumer segments of the market will stay pretty strong, and I do believe we’re going to see a resurgence in PC client sales.” Smaller declines in inventories contributed to growth for a second consecutive quarter as companies picked up the pace of orders, economists said. Stockpiles rose 0.4 percent in November, marking the first back-to-back increase in more than a year. Consumer spending, which accounts for about 70 percent of the economy, probably increased at a 1.8 percent annual rate after rising at a 2.8 percent pace in the previous three months, the GDP report is also projected to show. Third-quarter purchases received a boost from the government’s auto-incentive program that offered buyers discounts to trade in older cars and trucks for new, more fuel- efficient vehicles. The plan expired in August. Business Investment Orders for long-lasting goods probably rose 2 percent in December, economists project the Commerce Department will report Jan. 28. While companies are buying new equipment, they’re reluctant to hire workers. Payrolls fell by 85,000 last month after a 4,000 gain in November that was the first increase in almost two years. The U.S. has lost 7.2 million since the start of the recession in December 2007, the most of any slowdown in the post-World War II era. The jobless rate held at 10 percent in December, the Labor Department said on Jan. 8. A jump in the number of discouraged workers leaving the labor market kept the rate from rising. Property values are showing signs of stabilizing. A report from S&P/Case-Shiller, due Jan. 26, may show home prices in 20 U.S. metropolitan areas declined 5 percent in the year ended in November, the smallest drop since September 2007, according to the survey median. Existing home sales dropped 9.8 percent in December, the month after a government tax credit was originally due to expire, the survey showed ahead of a Jan. 25 report from the National Association of Realtors. Purchases decreased to a 5.9 million pace from 6.54 million the prior month. New-home sales last month rose 4.2 percent to an annual pace of 370,000, according to the survey median before a Commerce Department report on Jan. 27.
Source: Bloomberg
Sunday 24 January 2010
Fitch Upgrades Indonesia to 'BB+'; Outlook Stable
Fitch Ratings-Singapore/London-25 January 2010:
Fitch Ratings has today upgraded the Republic of Indonesia's Long-term foreign and local currency Issuer Default ratings (IDRs) to 'BB+' from 'BB', respectively. The Outlooks on the ratings are Stable. At the same time, the agency upgraded the Country Ceiling to 'BBB-' from 'BB+' and affirmed the Short-term foreign currency IDR at 'B'. "The rating action reflects Indonesia's relative resilience to the severe global financial stress test of 2008-2009 which has been underpinned by continued improvements in the country's public finances, a fundamental sovereign rating strength, and a material easing of external financing constraints," says Ai Ling Ngiam, Director, in Fitch's Sovereign Ratings team.
Public debt ratios continued to decline throughout 2009, falling to 30% of GDP (compared to a 'BB' median of 40%), and international reserves including gold, rose 28% to USD66bn, as the economy recorded the eighth-highest economic growth rate (4.6%) among all Fitch-rated sovereigns. Indonesia's sovereign creditworthiness is backed by its strong public finance track record relative to its peers. Indonesia was one of 15 Fitch-rated sovereigns which registered a year-on-year decline in the general government (GG) debt position as a share of GDP in 2009.
With the current macroeconomic path and fiscal policy framework, Indonesia's public debt/GDP looks set to continue on a downward trend during Fitch's forecast period. "There is fiscal flexibility for the authorities to embark on an ambitious agenda to tackle longer-term developmental issues, such as addressing infrastructure constraints and investment promotion as well as raising industrial and export competitiveness, which are central to further alleviating Fitch's concerns on risks surrounding Indonesia's external finances," adds Miss Ngiam.
However, Fitch says longer-term developmental priorities risk becoming sidelined if fiscal expenditure inefficiencies remain unresolved due to delays in electricity tariff and fuel price adjustments. As a result, incentivised smuggling of oil may add volatility to the balance of payments through abnormal spikes in oil imports. Further, sudden investor risk aversion and capital outflows may arise on the back of more severe or abrupt administrative price adjustments in 2011. Looking ahead, Indonesia's relatively shallow capital markets remain vulnerable to risks surrounding a reversal of high-yield carry trades or sudden emerging-market risk aversion. Policy credibility against potential "hot money" reversals would be bolstered by further strengthening of the monetary policy framework, including achieving greater price and exchange rate stability; deepening of the country's debt and capital markets; and building additional foreign exchange buffers.
The economy is better placed than before to face abrupt portfolio outflows on the back of sudden investor risk aversion or oil price hikes, due to exchange rate flexibility, further improvement in external finances resulting from foreign reserves (FXR) accumulation, lower gross external financing requirements, and a stronger international liquidity position. Fitch forecasts Indonesia's gross external financing requirement, including short-term external debt, at 43% of FXR in 2010, compared with the 'BB' median of 82%. Indonesia's international liquidity ratio is forecast at 192% in 2010 (liquid external assets > liquid external liabilities), the highest since 1990 and higher than the 'BB' median of 185%.
This provides a buffer against temporary closures of international capital markets or sudden reversals in capital flows. In contrast to heightened market volatility and corporate sector loan restructuring during previous periods of global stress, Indonesia fared relatively well during the global financial crisis, which proved to be an important test case for dollar demand pressures, exchange rate stresses and capital flows. Fitch estimates that rollover rates on private sector external debt exceeded 160% during Q109-Q309 as corporates secured sufficient financing from abroad to meet scheduled debt repayment.
Corporates likely benefited from improved profitability, external debt leveraging since the Asian financial crisis and favourable relationships with affiliate foreign parent companies and affiliates. In addition, the systemically important larger banks' low reliance on wholesale funding did not require sovereign support measures and are now well-placed for stronger credit expansion.
Applicable criteria, 'Sovereign Rating Methodology', dated 16 October 2009, are available on www.fitchratings.com. Contact: Ai Ling Ngiam, Singapore, +65 6796 7216. Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: shivani.sundralingam@fitchratings.com. Investor Relations: Shirley Oh, Singapore, +65 6796 7213 / shirley.oh@fitchratings.com. Investor Relations: Wayne Li, Hong Kong, +852 2263 9915 / wayne.li@fitchratings.com. Ratings Desk: Maggie Tang, Hong Kong, +852 2263 9898 / maggie.tang@fitchratings.com. Additional information is available on www.fitchratings.com.
Fitch Ratings has today upgraded the Republic of Indonesia's Long-term foreign and local currency Issuer Default ratings (IDRs) to 'BB+' from 'BB', respectively. The Outlooks on the ratings are Stable. At the same time, the agency upgraded the Country Ceiling to 'BBB-' from 'BB+' and affirmed the Short-term foreign currency IDR at 'B'. "The rating action reflects Indonesia's relative resilience to the severe global financial stress test of 2008-2009 which has been underpinned by continued improvements in the country's public finances, a fundamental sovereign rating strength, and a material easing of external financing constraints," says Ai Ling Ngiam, Director, in Fitch's Sovereign Ratings team.
Public debt ratios continued to decline throughout 2009, falling to 30% of GDP (compared to a 'BB' median of 40%), and international reserves including gold, rose 28% to USD66bn, as the economy recorded the eighth-highest economic growth rate (4.6%) among all Fitch-rated sovereigns. Indonesia's sovereign creditworthiness is backed by its strong public finance track record relative to its peers. Indonesia was one of 15 Fitch-rated sovereigns which registered a year-on-year decline in the general government (GG) debt position as a share of GDP in 2009.
With the current macroeconomic path and fiscal policy framework, Indonesia's public debt/GDP looks set to continue on a downward trend during Fitch's forecast period. "There is fiscal flexibility for the authorities to embark on an ambitious agenda to tackle longer-term developmental issues, such as addressing infrastructure constraints and investment promotion as well as raising industrial and export competitiveness, which are central to further alleviating Fitch's concerns on risks surrounding Indonesia's external finances," adds Miss Ngiam.
However, Fitch says longer-term developmental priorities risk becoming sidelined if fiscal expenditure inefficiencies remain unresolved due to delays in electricity tariff and fuel price adjustments. As a result, incentivised smuggling of oil may add volatility to the balance of payments through abnormal spikes in oil imports. Further, sudden investor risk aversion and capital outflows may arise on the back of more severe or abrupt administrative price adjustments in 2011. Looking ahead, Indonesia's relatively shallow capital markets remain vulnerable to risks surrounding a reversal of high-yield carry trades or sudden emerging-market risk aversion. Policy credibility against potential "hot money" reversals would be bolstered by further strengthening of the monetary policy framework, including achieving greater price and exchange rate stability; deepening of the country's debt and capital markets; and building additional foreign exchange buffers.
The economy is better placed than before to face abrupt portfolio outflows on the back of sudden investor risk aversion or oil price hikes, due to exchange rate flexibility, further improvement in external finances resulting from foreign reserves (FXR) accumulation, lower gross external financing requirements, and a stronger international liquidity position. Fitch forecasts Indonesia's gross external financing requirement, including short-term external debt, at 43% of FXR in 2010, compared with the 'BB' median of 82%. Indonesia's international liquidity ratio is forecast at 192% in 2010 (liquid external assets > liquid external liabilities), the highest since 1990 and higher than the 'BB' median of 185%.
This provides a buffer against temporary closures of international capital markets or sudden reversals in capital flows. In contrast to heightened market volatility and corporate sector loan restructuring during previous periods of global stress, Indonesia fared relatively well during the global financial crisis, which proved to be an important test case for dollar demand pressures, exchange rate stresses and capital flows. Fitch estimates that rollover rates on private sector external debt exceeded 160% during Q109-Q309 as corporates secured sufficient financing from abroad to meet scheduled debt repayment.
Corporates likely benefited from improved profitability, external debt leveraging since the Asian financial crisis and favourable relationships with affiliate foreign parent companies and affiliates. In addition, the systemically important larger banks' low reliance on wholesale funding did not require sovereign support measures and are now well-placed for stronger credit expansion.
Applicable criteria, 'Sovereign Rating Methodology', dated 16 October 2009, are available on www.fitchratings.com. Contact: Ai Ling Ngiam, Singapore, +65 6796 7216. Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: shivani.sundralingam@fitchratings.com. Investor Relations: Shirley Oh, Singapore, +65 6796 7213 / shirley.oh@fitchratings.com. Investor Relations: Wayne Li, Hong Kong, +852 2263 9915 / wayne.li@fitchratings.com. Ratings Desk: Maggie Tang, Hong Kong, +852 2263 9898 / maggie.tang@fitchratings.com. Additional information is available on www.fitchratings.com.
Subscribe to:
Posts (Atom)
Posts
