US-China trade deal should be 'positive' for shipping
Both countries entered into a 'phase one' agreement on Wednesday
Shipping should benefit from the "phase one" trade deal reached Wednesday between US and China after a nearly two-year tariff war, according to analysts.
China has agreed to buy $200bn in US goods over the next two years, including $50bn of energy, $32bn of agricultural products, $80bn of manufactured goods and $35bn worth of services.
In exchange, US will reduce some tariffs by half and remove others that were set to go into effect last month but still keep tariffs on about $370bn in Chinese imports, down from $540bn.
"While this is only the first step in a long reconciliation process, and much of concerns raised by President Trump were left untouched, this nonetheless should have the most positive implications for LNG exporters and LPG and petchem exports, specifically ethane and ethylene," Stifel analyst Ben Nolan wrote in a clients' note.
Chinese import of about 20 million tonnes per annum (mpta) of LNG would make $7bn in revenue for US producers and account for about one-third of Chinese demand, Nolan wrote.
US LNG producer Cheniere's 9.5mpta expansion of its Corpus Christi, Texas LNG plant would benefit most, given a 20-year deal to sell 20mpta to China's Sinopec come 2023.
Cheniere had 30 LNG carriers on charter last year.
All sectors stand to gain
He also said the agreement should provide "a modest positive" for tankers, LNG carriers and dry bulk ships.
US-to-China LNG exports fell 90% since 2017, hurting tonne-mile demand, but easing the tariffs should heighten long-haul demand for US-listed LNG carriers, particularly Gaslog and Golar LNG.
US-listed dry bulk shipowners, namely Star Bulk Carriers and Scorpio Bulkers, should see higher tonne-mile demand due to increased grain trade between the world's two largest economies.
Star Bulk Carriers' shares slipped 1.35% to $10.75 as close of New York's trading day approached. Scorpio Bulkers' stock has declined 1.7% to $5.54.
Crude tanker owners, including US-listed behemoth Euronav, should also benefit from more US-to-China deliveries, which have fallen 50% since 2017, Deutsche Bank analyst Amit Mehrotra wrote in a clients' note.
"The proposed Chinese purchases carries positive implications for global shipping markets through a combination of increased trade and longer-haul voyages which ties up capacity," he said.
Euronav shares have fallen 3% to $11.52.