MARKET DEVELOPMENT
Fitch Ratings 2022 Outlook: Asian Palm Oil
Fitch Ratings 2022 Outlook: Asian Palm Oil
17.11.2021 (www.hellenicshippingnews.com) - The impact of weaker crude palm oil (CPO) prices in 2022 is likely to be cushioned by higher yields and a significant release of working capital. Producers’ leverage should be largely unchanged as a result. Fitch expects CPO prices to decline due to higher output, and is assuming Malaysian benchmark spot prices will average USD750/tonne (t) versus USD1,050/t in 2021E.
Leverage at Sime Darby Plantation Berhad (SDP, BBB/Stable) and Golden-Agri Resources Ltd. (GAR), whose consolidated profile forms the basis of the ‘A-(idn)’/Stable ratings of PT Ivo Mas Tunggal and PT Sawit Mas Sejahtera, has declined significantly in 2021 due to the benefit from high prices. However, PT Tunas Baru Lampung Tbk’s (TBLA, B+/Negative) leverage as of end-1H21 implies minimal rating headroom compared with our rating sensitivity.
The company also needs to address bond maturities in 2023. Key factors to watch include the pace at which foreign workers return to Malaysian plantations, the impact on output from a recurrence of La Nina in late-2021, and potentially higher capex in Indonesia for downstream projects. The industry may also see a renewed interest in acquisitions, after more than a year of weak activity.
Source: Fitch Ratings
https://www.hellenicshippingnews.com/fitch-ratings-2022-outlook-asian-palm-oil/