World News
Moody's Upgrades Global Shipping Outlook to "Stable" on Continued Low Bunker Prices
Moody's Japan K.K. (Moody's) says its 12-18 month global shipping outlook is "stable," adding that it expects bunker prices to remain low and in line with expectations for crude oil prices for the duration of the outlook period.
"This growth rate is lower than the mid-to-high single-digit range we expected earlier in the year because some companies have reduced their demand expectations and freight rates remain low amid oversupply," says Mariko Semetko, a Vice President and Senior Analyst at Moody's.
Moody's says that along with continued low bunker prices, it also expects to see "low single-digit percentage aggregate year-over-year EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth" for shipping companies rated by the company.
"The EBITDA growth will be driven primarily by continued cost reductions stemming largely from weak oil prices, which reduce shipping companies' fuel costs and keep demand high for oil tankers," explains Semetko.
Moody's notes that slight variations in terms of business conditions, such as supply and demand, will be seen across the different shipping sectors.
The analysts assert that the dry bulk will likely see the least EBITDA growth linked to slowing demand from China's economic slowdown.
Excess supply will hit the container segment the hardest, "particularly in 2015," says Moody's, noting that EBTIDA growth is expected from bunker-cost savings over the outlook period.
Meanwhile, tanker demand and EBITDA growth will be driven by weak oil prices, the company adds.
While Moody's outlook is far from bullish, it is considerably more positive than the outlook from some analysts.
Earlier this week Drewry Shipping Consultants Ltd (Drewry) said the box shipping sector is in an over-capacity crisis and set to face even tougher times in 2016, and in September warned that any relief for the ailing dry bulk sector is still a "long way off."
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
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