Equity Research Analyst, Maritime sector, Drewry Maritime Financial Research

Ankush Kathuria CFA, FRM

Equity Research Analyst, Maritime sector

Maritime Sector, Equity & Credit Research

Drewry Maritime Financial Research

With no ties to other players in the shipping, finance or banking world, we provide a uniquely impartial view of the markets and companies we cover. Our parent organization, Drewry is a leading independent provider of research services to the maritime and shipping industry, employing over 100 professionals across an international network of offices in London, Delhi, Singapore and Shanghai. Combining our market-leading resources with seasoned sector expertise DFRS offers a highly differentiated and comprehensive range of investment and financial research services to lenders and prospective investors in publicly listed maritime and shipping companies. The full service of reports, supporting resources and sector orientated webinars provides our clients with the most complete picture of the organisations under coverage as is possible. We have been charting and analysing the world’s maritime markets for more than 40 years. This unrivalled intelligence and understanding provides the foundation of our research service. Our analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.

Thematic (Sector/Industry)

Macau Marine / Thematic (Sector/Industry)

• Container Shipping: Despite the Uncertainty, We Expect the Market to Continue in Much of the Same Manner in 2020 as It Did in 2019. Lines Will Remain Price-Takers as the Supply-Demand Fundamentals Will Work Against Them Although They Should Be Able to Remain Profitable as Long as Operating Costs Are Kept in Check. It Will Be a Tightrope Act and the Capacity Levers of Idling and Void Sailings Will Be Pulled Frequently.• Port Operators: Port Sector Celebrated the Reduction in the Global Trade Tension. Index Gained C.4% in the Last Quarter of 2019. Now with the US and China Finalizing the Phase 1 of Trade Deal and Phase 2 Moving Towards the End of 2020 (Post the US Presidential Election), We Believe Other Policy Decisions and Geopolitical Agendas to Take the Centre Stage, Shaping the Direction of the Global Trade.• Dry Bulk Shipping: Initial Chaos over Scrubbers and Unavailability of Low-Sulphur Bunker at Many Ports Across the Globe Will Push up Earnings for Dry Carriers in the Initial Months of 2020. More than 2% of the Dry Bulk Fleet Is Now at Yards to Install Scrubbers, and We Expect This Trend to Continue in 2020 as Well, Squeezing Effective Supply. Meanwhile, Vessels Without Scrubbers Will Sail on LSFO Which, We Expect, Will Be Sold at a Premium of USD 200-300 Per Tonne. These Vessels Will Slow-Steam to Save on High Bunker Costs, a Phenomenon Which Will Further Reduce Vessel Supply.• LNG Shipping: Spot LNG Shipping Rates Have Continued to Decline Recently on Account of Softening Asian LNG Demand and Higher Inventory Levels in Asia. China’s Coal to Gas Switch Momentum Has Come Down Due to the Slowing Economy. The LNG Shipping Stocks Under Our Coverage Remained Flat on an Average in FY19 and 4Q19.• LPG Shipping: The Outlook for Global Seaborne LPG Volumes Is Positive, with LPG Charter Rates Expected to Remain Firm in Early 2020 as Heavy Fixing Activity Out of the US Gulf – in Light of a Strong US-Asia Propane Price Arbitrage in December 2019 – Has Kept Vessel Availability Low. In December 2019, VLGC Earnings Were Around USD 1.8mn Per Month – Nearly Three Times from USD 606,000 Per Month in December 2018. High LPG Demand on US-Asia Trade and Limited Vessel Availability Might Further Drive Earnings in 2020.• Crude Tanker Shipping: Drewry Expects 2020 to Be a Strong Year for the Crude Tanker Market, Supported by Growing Long-Haul Trade, the Positive Impact of IMO 2020 and Truncated Supply Because of Geopolitics. Although Record Highs Seen in October 2019 Are Unlikely to Be Repeated, We Expect the Market to Carry Some of the Recent Firmness into 2020. The Main Driver of Rising Tonnage Demand in the Crude Tanker Market Will Be Strong Growth in Long-Haul Trade from the Atlantic to Asia. Burgeoning Growth in Crude Production in the US, Brazil and Norway Is Likely to Result in Deeper Production Cuts by OPEC+ in 2020, Which in Turn Will Force Asian Buyers to Import Crude from Farther Afield.• Product Tanker Shipping: Product Tanker Spot Rates Surged in 4Q19 on the Back of IMO-Related Demand and Geopolitical Tensions. We Expect Refined Product Trade to Benefit from the Demand for IMO-Compliant Fuel as Only 10% of the Global Active Merchant Fleet Are Fitted with Scrubbers. We Expect the Results of Product Companies in 4Q19 to Positively Benefit from Improving Product Tanker Prospects.

• Container Shipping: Despite the Uncertainty, We Expect the Market to Continue in Much of the Same Manner in 2020 as It Did in 2019. Lines Will Remain Price-Takers as the Supply-Demand Fundamentals Will Work Against Them Although They Should Be Able to Remain Profitable as Long as Operating Costs Are Kept in Check. It Will Be a Tightrope Act and the Capacity Levers of Idling and Void Sailings Will Be Pulled Frequently.• Port Operators: Port Sector Celebrated the Reduction in the Global Trade Tension. Index Gained C.4% in the Last Quarter of 2019. Now with the US and China Finalizing the Phase 1 of Trade Deal and Phase 2 Moving Towards the End of 2020 (Post the US Presidential Election), We Believe Other Policy Decisions and Geopolitical Agendas to Take the Centre Stage, Shaping the Direction of the Global Trade.• Dry Bulk Shipping: Initial Chaos over Scrubbers and Unavailability of Low-Sulphur Bunker at Many Ports Across the Globe Will Push up Earnings for Dry Carriers in the Initial Months of 2020. More than 2% of the Dry Bulk Fleet Is Now at Yards to Install Scrubbers, and We Expect This Trend to Continue in 2020 as Well, Squeezing Effective Supply. Meanwhile, Vessels Without Scrubbers Will Sail on LSFO Which, We Expect, Will Be Sold at a Premium of USD 200-300 Per Tonne. These Vessels Will Slow-Steam to Save on High Bunker Costs, a Phenomenon Which Will Further Reduce Vessel Supply.• LNG Shipping: Spot LNG Shipping Rates Have Continued to Decline Recently on Account of Softening Asian LNG Demand and Higher Inventory Levels in Asia. China’s Coal to Gas Switch Momentum Has Come Down Due to the Slowing Economy. The LNG Shipping Stocks Under Our Coverage Remained Flat on an Average in FY19 and 4Q19.• LPG Shipping: The Outlook for Global Seaborne LPG Volumes Is Positive, with LPG Charter Rates Expected to Remain Firm in Early 2020 as Heavy Fixing Activity Out of the US Gulf – in Light of a Strong US-Asia Propane Price Arbitrage in December 2019 – Has Kept Vessel Availability Low. In December 2019, VLGC Earnings Were Around USD 1.8mn Per Month – Nearly Three Times from USD 606,000 Per Month in December 2018. High LPG Demand on US-Asia Trade and Limited Vessel Availability Might Further Drive Earnings in 2020.• Crude Tanker Shipping: Drewry Expects 2020 to Be a Strong Year for the Crude Tanker Market, Supported by Growing Long-Haul Trade, the Positive Impact of IMO 2020 and Truncated Supply Because of Geopolitics. Although Record Highs Seen in October 2019 Are Unlikely to Be Repeated, We Expect the Market to Carry Some of the Recent Firmness into 2020. The Main Driver of Rising Tonnage Demand in the Crude Tanker Market Will Be Strong Growth in Long-Haul Trade from the Atlantic to Asia. Burgeoning Growth in Crude Production in the US, Brazil and Norway Is Likely to Result in Deeper Production Cuts by OPEC+ in 2020, Which in Turn Will Force Asian Buyers to Import Crude from Farther Afield.• Product Tanker Shipping: Product Tanker Spot Rates Surged in 4Q19 on the Back of IMO-Related Demand and Geopolitical Tensions. We Expect Refined Product Trade to Benefit from the Demand for IMO-Compliant Fuel as Only 10% of the Global Active Merchant Fleet Are Fitted with Scrubbers. We Expect the Results of Product Companies in 4Q19 to Positively Benefit from Improving Product Tanker Prospects.

Shipping Investors Edgy as Low-Sulphur Regulation Takes Effect.