Product Tanker Market

Transcription

1 Product Tanker Market Chemical & Product Tanker Conference London 8 th 9 th March 2011 Presented by Simon Newman Senior Tanker Analyst

2 Historical Earnings & Asset Prices

3 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Monthly Average Rates TC1 TC5 TC2 $'000/day AG/Japan 75,000t AG/Japan 55,000t UKC/USAC 37,000t $80 $70 $60 $50 $40 $30 $20 $10 $0

4 Annual Average Rates TC1 TC5 TC2 AG/Japan 75,000t AG/Japan 55,000t UKC/USAC 37,000t 2000 $29,500 $13, $41,000 $20, $20,000 $11, $32,500 $17, $41,000 $32,500 $25, $41,000 $33,500 $26, $31,500 $25,500 $23, $22,500 $21,500 $24, $41,000 $32,000 $24, $15,500 $11,500 $8, $13,000 $9,000 $9, YTD $5,500 $4,000 $9,000 Bottomed? 2009 turned out to only be the bottom for MRs. This time last year we expected all three sectors to turn upwards in 2010

5 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 3-Year Tanker Timecharter Rates LR2 LR1 MR $'000/day 3-yr Aframax/LR2 3-yr Panamax/LR1 3-yr MR $35 $30 $25 $20 $15 $10 TC Market $5 Broadly stable $0

6 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Tanker Newbuilding Prices LR2 LR1 MR $m 90 Aframax Newbuilding Prices MR Newbuilding Prices LR1 Newbuilding Prices Handy Newbuilding Prices Decline Newbuilding Market Prices have rebounded between 10 and 17% after declining between 37 and 42%, however the rise is now seemingly capped by a weak freight market and excess shipbuilding capacity (more on this later) Aframax -37% LR1-40% MR -41% Handy -42% Recovery Aframax 12% LR1 17% MR 16% Handy 10% 0

7 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Tanker 5-year old Prices LR2 LR1 MR $m 90 Aframax 5-Year Old Prices MR 5-Year Old Prices LR1 5-Year Old Prices Handy 5-Year Old Prices Second-Hand Market Prices were initially up on hopes of recovery a recovery, only to slump following a continued weak market Decline Aframax -56% LR1-51% MR -61% Handy -57% Recovery Aframax 17% LR1 0% MR 24% Handy 25%

8 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Price to Earnings Ratios Newbuilding and Second-Hand Price vs 3-Year TC Rate P/E Aframax NB LR1 NB 3,500 MR NB Handy NB 3,000 2,500 P/E Aframax 5yo LR1 5yo 3,500 MR 5yo Handy 5yo 3,000 2,500 Second-Hand Timecharter rates moving broadly inline with the second-hand market 2,000 1,500 1,000 Newbuildings As the timecharter market falters and newbuilding prices hold flat the uptrend continues 2,000 1,500 1,000

9 Fleet Growth

10 Aframax Fleet Developments 80, ,999 dwt No. Vessels Net fleet change % % 5.1% 9.8% 4.6% 3.8% 2.8% 1.6% Aframaxes Fleet growth declining Includes both coated and uncoated tonnage Predicted Deliveries Predicted Removals Net Change Predicted deliveries may differ from the current orderbook to account for slippage of deliveries and further ordering.

11 Panamax Fleet Developments 60,000 79,999 dwt No. Vessels Net fleet change % % 7.6% 4.9% 2.3% 2.5% 2.7% 4.1% Panamaxes Fleet growth bottomed Predicted Deliveries Predicted Removals Net Change Predicted deliveries may differ from the current orderbook to account for slippage of deliveries and further ordering.

12 Large MR Fleet Developments 45,000 54,999 dwt No. Vessels % % 7.9% 5.6% 5.9% 20.7% Large MRs Net fleet change % Fleet growth stabilising 5.5% Predicted Deliveries Predicted Removals Net Change Predicted deliveries may differ from the current orderbook to account for slippage of deliveries and further ordering.

13 Small MR Fleet Developments 27,000 44,999 dwt No. Vessels Net fleet change % % 3.2% 1.1% -2.3% -3.8% -1.7% 0.0% Predicted Deliveries Predicted Removals Net Change Small MRs Fleet growth still likely to be negative until end Predicted deliveries may differ from the current orderbook to account for slippage of deliveries and further ordering.

14 Small and Large MR Fleet Developments 27,000 54,999 dwt No. Vessels % % Predicted Deliveries Predicted Removals Net Change 8.0% k dwt MRs Fleet growth bottoming this year, much lower going forward than previous years 2.4% % Net fleet change % 2.2% % Predicted deliveries may differ from the current orderbook to account for slippage of deliveries and further ordering.

15 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 CPP Storage Time-Series Including 1M-3M Gasoil Contango m. Tonnes VLCC m. Tonnes Suez NB m. Tonnes Afra NB m. Tonnes LR2 m. Tonnes LR1 m. Tonnes MR m. Tonnes Total m. Tonnes Gasoil M1-M3 Contango $/tonne $ $ $ $ $ $ $ $5.00

16 Deliveries and Orderbook Tankers Bulk Carriers Containerships Gas Carriers m DWT LPGC 70k+ CBM Spare capacity If the orders for 2011 set the level for annual shipyard capacity, there is a lot spare in the years ahead LPGC 20-40k CBM LNGC Tanker 200k dwt+ Tanker k dwt Tanker k dwt Tanker 60-80k dwt Tanker 27-60k dwt Container TEU Container TEU Container TEU Container TEU Container TEU Bulk Carrier 200k dwt+ 20 Bulk Carrier k dwt OB 2012 OB 2013 OB 2014 OB 2015 OB Bulk Carrier k dwt Bulk Carrier 60-80k dwt Bulk Carrier 27-60k dwt

17 Yard Risk LR2 LR1 MR Handy Small Small 7% 9% 1% 32% 3% 7% 21% 22% Handy 4% 11% 9% 13% 37% 16% 11% MR 6% 20% 49% 19% 6% Panamax 21% 8% 15% 48% 6% 1% Aframax 10% 2% 1% 6% 62% 19% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other (Delays Likely) China Unrated Yard First Ship 2009 China Cat 2 Established South Korea Other (Delays Unlikely) China Unrated Yard First Ship 2010 or Later China Unrated Yard Established China Cat 1 Established Japan

18 Demand Trends & Trade

19 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 World Oil Demand vs Crude Oil Prices Including Forecast Revisions m bpd Y-o-Y Change in World Oil Demand Inflation Adjusted Oil Price Average Price of Dated Brent $/bbl m bpd OPEC US EIA IEA (includes bio-fuels, NGLs and other non-conventional oil) IEA EIA OPEC m m m m m m Source: IEA. BP Stats, EIA. Forecasts supplied by IEA, US EIA and OPEC

20 IMF GDP Forecast Including Forecast Revisions % TC1 TC2 World GDP % Forecast as at Oct-08 GDP (Including Oct-10 Forecast) TC5 World GDP % Forecast as at Oct-09 World GDP % Forecast as at Oct-07 $'000/day $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Despite the economic crisis the IMF continue to stand firm on their original 4-5% GDP growth estimates from 2010 onwards

21 GDP Growth, Oil Demand & Tanker Rates IMF IEA % Change 6.0% 5.0% 4.0% 3.0% 2.0% World GDP Growth Oil Demand Growth Aframax Earnings MR Earnings $/day Earnings 140, , ,000 80,000 60,000 Economic and oil demand recovery under way Risks to economic recovery remain including sovereign debt & sustainability of recovery as stimulus withdrawn 1.0% 0.0% -1.0% -2.0% 40,000 20, ,000 Future risks to economic and oil demand growth include further spiralling of commodities prices & inflation Source Data IMF and IEA

22 Imports of Main Products into the US Fuel Oil Gasoil/Diesel Jet/Kerosene Gasoline Million BPD Fuel Oil Gasoil/Diesel Jet/Kerosene Gasoline Major US Imports Fell 2010 vs 2009 for major products imports Source data US Dept of Energy (EIA)

23 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 US Products Trade Gross Imports/Exports '000 bpd Gasoline Imports Jet/Kero Imports Gasoil/Diesel Imports Fuel Oil Imports Gasoline Exports Jet/Kerosene Exports Gasoil/Diesel Exports Fuel Oil Exports but Products exports offsetting some of the trades Source data: U.S. Dept. of Energy - EIA

24 Imports of Main Products into OECD Europe (excludes intra-regional trade) Million bpd Fuel Oil Jet/Kero Gasoil/Diesel Gasoline Jet demand Demand likely to have been flat 2010 on 2009 without the disruptions to jet demand due to the Icelandic volcano incident Source data IEA Jan- Nov

25 Imports of Main Products into OECD Pacific (excludes intra-regional trade) Million bpd Fuel Oil Jet/Kero Gasoil/Diesel Gasoline Demand sliding Asia Pacific demand continues to slide YTD

26 Million BPD Naphtha Imports South Korea Naphtha South Korea Australia FSU Africa Europe Americas Other Asia India Middle East Million BPD Japan South Korea Growth continues Uncertain Australia FSU Africa Europe Americas Other Asia India Middle East Japan growth recovering

27 Chinese Products Trade Gross Imports/Exports '000 tons Gasoline Imports Gasoline Exports 3000 Kerosene Imports Kerosene Exports 2500 Diesel Oil Imports Diesel Oil Exports 2000 Others Imports Others Exports Fuel oil Fuel oil demand increased towards the end of 2010 as China tried to reach emissions targets which shut-in coal-fired capacity Jan- 03 Jul- 03 Jan- 04 Jul- 04 Jan- 05 Jul- 05 Jan- 06 Jul- 06 Jan- 07 Jul- 07 Jan- 08 Jul- 08 Jan- 09 Jul- 09 Jan- 10 Jul- 10 Source data: Chinese Customs Statistics

28 Chinese Naphtha Imports by country Million BPD Australia FSU Africa Americas Europe Middle East Other Asia India China Huge potential for growth as petrochemical industry builds up absolute levels still relatively low

29 Refinery Capacity, Oil Demand and Supply North America China India mb/d N. American Refinery Capacity N. American Oil Demand N. American Oil Supply Demand > Supply Demand growing faster than refinery capacity mb/d Chinese Refinery Capacity Chinese Oil Supply Chinese Oil Demand Demand > Supply Demand growing faster than refinery capacity (for the moment) mb/d Indian Refinery Capacity Indian Oil Supply Indian Oil Demand Excess Ref. Capacity Excess refinery capacity versus demand Demand growing once again Crude distillation capacities at start of year

30 Refinery Capacity, Oil Demand and Supply Europe Japan South Korea mb/d 15 Main European Countries' Refinery Capacity Main European Countries' Oil Demand Main European Countries' Oil Supply mb/d 6 Japanese Refinery Capacity Japanese Oil Demand mb/d 3.0 Korean Refinery Capacity Korean Oil Demand Excess Ref. Capacity Excess refinery capacity versus demand Excess Ref. Capacity Excess refinery capacity versus demand Excess Ref. Capacity Excess refinery capacity versus demand Crude distillation capacities at start of year

31 Refinery Capacity, Oil Demand and Supply Middle East Africa Russia mb/d 8 Middle Eastern Ref. Cap. Middle Eastern Oil Demand mb/d 3.5 African Refinery Capacity African Oil Demand mb/d 8 Russian Refinery Capacity Russian Oil Demand More Import Potential Demand growing faster than refinery capacity More Import Potential Demand growing faster than refinery capacity Excess Ref. Capacity Continued excess refinery capacity versus demand Crude distillation capacities at start of year

32 World Refinery Capacity Regions facing shortage of refinery capacity More Imports More products imports into the US, Latin America, Africa & Middle East China China currently has a deficit of refinery capacity but will likely catch-up within two years Increasing imports Export potential Demand growing faster than refinery capacity Excess Capacity India, Europe, Japan and South Korea are long refining capacity, although weak margins has shut-in some capacity in all but India

33 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 No. of passenger cars in thousands Consumption m bpd No. of passenger cars in millions Consumption m bpd 200 Indian and Chinese Passenger Car Sale Including Gasoline and Diesel Consumption Indian Car Sales Gasoline Gasoil/Diesel Indian Car Sales Chinese Car Sales Gasoline Gasoil/Diesel Chinese Car Sales % 35% Car Sales Gasoline Gasoil/Diesel % 60% Car Sales Gasoline Gasoil/Diesel 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% 0% 0% Source Data: IEA -10%

34 Topical Points & Conclusions

35 Libya Market Impact With lack of crude supply, depleting reserves, coupled with some refineries shutin, the supply of products has been greatly constrained What product is available is then facing issues with port disruptions and/or owners unwilling to load their vessels in Libya. The marine insurance market in London has now added Libya to its list of areas deemed high risk The overall knock-on effect is a reduction in the availability of jet, fuel oil, naphtha and condensate in the Med., however with Libya a new importer of gasoline, and currently lacking the ability to receive it, there is increased availability

36 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Bunker Prices Brent WTI Worldwide IFO380 cst $/barrel $160 Brent WTI Worldwide Average IFO380 $/tonne $800 With Crude At IFO380 at (basis Brent) IFO380 at (basis WTI) $140 $700 $100/bbl $ $ $120 $600 $120/bbl $ $ $100 $500 $140/bbl $ $ $160/bbl $ $ $80 $400 $180/bbl $1, $1, $60 $300 $200/bbl $1, $1, $40 $200 January 2000 to July 2008 $20 $100 For every $1/barrel rise in the oil price, IFO380 increased by around $4.55-$4.60/tonne $0 $0 December 2008 to Present For every $1/barrel rise in the oil price, IFO380 increased by around $5.50-$5.65/tonne

37 Conclusions Market Outlook In the medium term trade prospects look promising, with refinery shortages or capacity being squeezed, especially in Latin America and Africa, but also to a lesser extent in China, India and the US longer term developments in refining will catch-up Increase in east/west long-haul trade as demand recovers, with India primed for export of high-end products to the Atlantic basin. Also increase in intra-atlantic basin trade with increases from Europe and the US to Latin America and Africa Potential for growing naphtha imports as China continues to develop its petrochemicals industry Fleet growth is easing after a number of years of high growth, however it will be a slow-andsteady recovery as demand growth begins to take up the slack of previous years of excessive deliveries Newbuilding prices will likely remain suppressed due to excess yard capacity however as demand improves the real challenge to the industry will be preventing excessive take-up of cheap orders

38 Thank you Produced by ICAP Shipping Research Managing Director James Leake Head of Oil & Tanker Research Simon Chattrabhuti Senior Tanker Analyst Simon Newman Tanker Analysts Angela Fang, Stavroula Betsakou Head of Dry & Basic Materials Research Georgi Slavov Dry Analysts Michael McHugh, Nneka Chike-Obi, Rui Guo Head of Consultancy Dr. Philip Rogers ICAP Shipping International Limited, 2 Broadgate, London EC2M 7UR United Kingdom shippingresearch@icap.com ICAP Shipping Derivatives Limited and ICAP Shipping Tanker Derivatives Limited are authorised and regulated by the Financial Services Authority ICAP Shipping International Limited This report has been prepared by ICAP Shipping or its affiliates ("ICAP Shipping") and is addressed to ICAP Shipping customers only and is for distribution only under such circumstances as may be permitted by applicable law. This information has no regard to specific investment objectives, financial situation or particular needs of any specific recipient. It is published solely for informational purposes and this information is not, and should not be construed as, an offer or solicitation to sell or buy any product, investment, security or any other financial instrument. ICAP Shipping does not make any representation or warranty, express or implied, as to the accuracy, completeness or correctness of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. Neither ICAP Shipping, nor any of its directors, employees or agents, accepts any liability for any loss or damage, howsoever caused, arising from any reliance on any information or views contained in this report. While this report, and any opinions expressed in it, have been derived from sources believed to be reliable and in good faith they are not to be relied upon as authoritative or taken in substitution for the exercise of your own commercial judgment. Any opinions expressed in this report are subject to change without notice and may differ from opinions expressed by other areas of the ICAP group. ICAP Shipping is under no obligation to update or keep current the information contained herein. This report may not be reproduced or redistributed, in whole or in part, without the written permission of ICAP Shipping and ICAP Shipping accepts no liability whatsoever for the action of third parties in the respect. Certain companies in the ICAP Shipping group are authorised and regulated by the Financial Services Authority. This information is the intellectual property of ICAP Shipping. ICAP Shipping and the ICAP Shipping logo are trademarks of the ICAP group. All rights reserved.