SHIPPING Impact of phase one trade deal In a 23 August update, we pointed out that the USChina trade war had hurt crude, LNG and LPG, and that a further escalation was likely. While the full extent is yet to be known, the “phase one” deal would positively impact dry bulk trade, and could see positive effects for container trade. Energy-related products would be positively affected if part of the USD200bn of purchases from the US that China has pledged to make, and is likely to be rewarded in further phases.
Agreement in principle… The full extent of the phase one agreement between the US and China is yet to be known. However, what seems clear is that the US will not proceed with new tariffs from December this year, and will slash the tariff from 15% to 7.5% on USD160bn worth of goods. The 25% tariff on USD250bn goods remains. In response, China has agreed to purchase US goods and services of at least USD200bn in the next two years, of which USD40bn–50bn annually in US agricultural products are included.
…aiding dry bulk… According to Clarksons dry bulk monitor (industry benchmark for historical dry bulk volumes), global soybean exports saw a CAGR of ~9% in 2011–2017, from 86m tonnes to 146m tonnes, and Chinese imports accounted for an average 70% of the growth. Global soybean trade was flat in 2018 and Clarkson forecasts flat volumes also in 2019. Chinese imports fell 8% YOY to 88m tonnes in 2018, corresponding to a 19% YOY decline to 43m tonnes in US exports. Albeit partly driven by swine flu, we expect phase one to see potential for more seaborne volumes, moving from the US to China. US exports account for slightly less than 1% of global bulk trade in volume terms, but more from a tonne-mile perspective due to the significant sailing distances involved (averaged 9k nautical miles in 2017, global bulk trade average is 5.6k nautical miles). …and providing support for containers. We believe the phase one agreement would be positive for container trade. Volume growth was running at a healthy 4.9% in 2017, 4.4% in H1 2018, but has averaged 1.8% in the last five quarters and YTD volumes in 2019 are 1.3%. Global PMI had reached a peak in December 2017 and started a downward trajectory prior to the trade war escalated, but these tensions have likely contributed negatively as well.
US energy exports still key. In a 23 August update, we pointed out that the US-China trade war had hurt crude, LPG and LNG. LNG could in particular benefit, as further agreements would likely involve Sale and Purchase agreements for US liquefaction volumes, pressing ahead with the second wave of long-haul US export projects.
US exported 21% of its crude to China in the 12-month period to August 2018, while the average since has been 3%. Other Asian countries have stepped up purchases, which have seen flat to marginally negative sailing distances at 7.9k nautical miles.
A 25% tariff on US LPG was levied in August 2018. From importing 14% of US LPG volumes in 2017, this share fell to 9% in H1 2018, 5% in H2 2018, and further down to 1% in the period since. However, sailing distance has increased 7% to 7.6k nautical miles in 2019, due to other Asian countries importing more US LPG.
A tariff of 25% on US LNG was implemented in June 2019, after 10% had been in effect since September 2018. China imported 1.4m tons of US LNG in H1 2018 (14% of total US volumes), declining to 0.8m tons in H2 2018 (6% of US volumes), and imports in 2019 have averaged 1% of US volumes.

DNB Markets 16 December 2019

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Target Share Company Cur Rec Price Price P/E 19e P/E 20e P/E 21e A. P. Møller Mærsk DKK SELL 8700 10060 40.1 26.1 33.6 Avance Gas NOK BUY 55.00 50.70 6.9 6.0 9.0 BW LPG NOK BUY 83.00 72.05 5.3 5.7 10.2 D/S Norden DKK BUY 138.0 103.0 46.6 5.3 6.2 DHT Holdings USD BUY 9.00 7.21 10.2 3.8 6.6 Dorian LPG USD BUY 15.90 14.78 nm 5.4 6.7 Eagle Bulk Shipping USD BUY 5.70 4.22 nm 12.6 12.2 Epic Gas NOK NO REC N/A 14.40 5.5 3.2 2.4 Euronav USD BUY 13.40 11.45 21.8 5.7 18.0 Flex LNG NOK BUY 108.00 84.80 19.2 4.8 4.1 Frontline NOK BUY 123.0 100.6 12.4 5.4 9.7 GasLog USD BUY 17.00 9.71 nm 7.3 8.2 Genco Shipping & Trading USD BUY 13.10 9.71 nm 8.3 9.1 Golar LNG USD BUY 23.00 13.17 nm nm 12.9 Golar LNG Partners USD HOLD 10.90 8.73 11.4 12.5 22.6 Golden Ocean NOK BUY 59.00 49.56 23.3 10.1 9.3 Hunter Group NOK BUY 6.30 4.86 83.3 4.8 5.2 Höegh LNG Holdings NOK BUY 43.00 31.15 nm 91.8 39.7 Höegh LNG Partners USD HOLD 16.00 15.25 13.2 10.2 10.0 MPC Container Ships NOK HOLD 20.00 18.40 Ocean Yield NOK BUY 60.00 48.15 18.9 13.0 8.9 Odfjell NOK BUY 41.00 25.80 nm 7.7 3.7 Safe Bulkers USD BUY 2.40 1.72 13.7 4.3 3.9 Scorpio Tankers USD BUY 38.00 35.35 nm 8.0 6.0 SFL Corporation Ltd USD BUY 14.70 14.38 15.7 12.9 13.8 Star Bulk USD BUY 12.30 10.93 97.5 4.0 4.6 Stolt-Nielsen NOK BUY 140.0 111.6 21.2 6.5 4.8 Teekay Tankers USD BUY 2.90 21.86 98.3 29.4 66.4 Wallenius Wilhelmsen ASA NOK HOLD 23.00 21.36 9.1 8.3 5.4 Wilh. Wilhelmsen Holding NOK BUY 202.0 151.0 5.6 11.9 7.7

Det var lenge siden Mooi, hyggelig at du er tilbake.
Fortsatt i TNK håper jeg?

Hei Surik,
Jeg sitter fortsatt i TNK & DHT. I tillegg har jeg fokusert på HLNG i det siste :)

Har lest en del av forum postene, men har hatt såpass mye på jobb at overskuddet til å delta ikke har vært der.
Nå har jeg ferie så da hadde jeg mulighet til å delta litt igjen :)
Håper alt går bra med deg og Volf i forhold til deres investeringer.

Takk skal du har Volf.
/Mooi