CORONAVIRUS HOLDS MARKETS FIRMLY IN ITS GRIP
Share prices of crude tanker companies lost more than 12% w-o-w. The novel coronavirus has caused growing concerns about a sharp reduction in oil demand from the air- and land-transport in Asia. Latest estimates published by news agencies range between 250k bpd and 1,000k bpd lower demand for the foreseeable future. Furthermore, it seems that the US sanctions on part of the Cosco VLCC fleet have been lifted which may re-add 20 vessel to the global VLCC fleet. Crude tanker stocks are now trading back again at around 0.8x NAV which implies that investors fear that asset prices may come down by 20%-30%.
Euronav was the first tanker company to report its 2019-Q4 figures last week. Actual figures were in line with expectations and the outlook for Q1 was quite good. The company announced to opt for higher dividends this year which makes sense in our view given their relatively low loan-to-value.
LNG stocks plummeted, too. Some of the charts now look similar to the beginning of 2018 when stock prices for LNG companies collapsed. At that time, share prices turned upwards very quickly. It remains to be seen whether this year will show a similar pattern.
Our sentiment index for the broad market has fallen below the zero-line by end of January, indicating a low season for shipping stocks in spring 2020. In the coming weeks we will see whether markets can stabilize.