Dry Bulk Shipping in Indonesia Opportunities & Outlook Mare Forum, Jakarta 27 Peter Malpas 29 th November 27
Introduction
Indonesia Key Facts Land Area 1,919,44 km2 = World s s 16 th Largest Population 235 million = World s s 4th Largest GDP (PPP) US$ 1.38 trillion = World s s 15 th Largest GDP per capita US$ 4,356 = World s s 114 th largest Comprising 17,58 islands
Fundamentals
GDP Long Term View China India USA Indonesia 15 1 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 5-5 % annual growth -1-15 Source: Official - BS
Asian Economies GDP parity US$ (trillion) 16. 14. 12. 1. 8. 6. 26 21 4. 2.. China Skorea India Japan Taiwan Philipp Cambodia Spore Indonesia thailand vietnam malaysia USA Australia
Energy Forecasts
World Energy Demand by Source Oil Natural Gas Coal Nuclear Renewables Quadrillion btu 25 225 2 175 15 125 1 75 5 25 199 1992 1994 1996 1998 2 22 24 26 28 21 215 22 225 23 Source: EIA
China Energy Demand by Type quadrillion btu 11 1 9 8 7 6 5 4 3 2 1 Oil Natural Gas Coal Nuclear Renewables 23 21 215 22
India Energy Demand by Type 3 Oil Natural Gas Coal Nuclear Renewables 25 quadrillion btu 2 15 1 5 23 21 215 22
Steel Intensity & Steel Forecasts
Steel Drives the Market! Steel Related Steam Coal 73 % % Dry Bulk Cargoes 44 62 % % 25 % 23 % 52 % 6 % 2 22 % % 7 % World Australia India China Cape Trade
Steel Intensity The relationship between economic growth and steel consumption. Based on the logic that increases in GDP have less impact in steel consumption in developed economies than emerging ones. Moderated by market intelligence.
Steel Consumption Potential 14 14 12 cons/pc 27 population 27 117 12 per capita steel cons (kg) 1 8 6 4 332 445 698 1 8 6 4 population (million) 2 42 43 India Indonesia China USA Japan South Korea 2
Indonesia Steel Consumption 18, 8 16, 14, 12, 1, 8, 6, 4, 2, k tonnes kg per capita 7 6 5 4 3 2 1 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215
China Steel Consumption 7, 65, 6, 55, 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, k tonnes kg per capita 5 45 4 35 3 25 2 15 1 5 1993 1995 1997 1999 21 23 25 27 29 211 213 215
Indonesian & World Trade
World Dry Bulk Trade 26 Baux/Alumina 2% Phos Rock/Fert 5% Coking Coal 6% Minor Ores 2% Other Minor Bulk 9% Iron Ore 22% Forest Prod 7% Steam Coal 19% Agribulk 13% Steel Ind Minor Bulk 15%
Dry Bulk Trade Growth 5,, 4,5, 4,, 3,5, 3,, 2,5, 2,, 1,5, 1,, 5, 1995 1997 1999 21 23 25 27 29 211 213 215 k tonnes Other Other Forest Products Woodchip Salt Cement/Clinker Scrap Coke Phos Rock /Fert Bauxite /Alum Steel Grain Coal Iron Ore
China Monthly Iron Ore Imports 4 35 3 25 2 15 1 5 Aug-2 Nov-2 Feb-3 May-3 Aug-3 Nov-3 Feb-4 May-4 Aug-4 Nov-4 Feb-5 May-5 Aug-5 Nov-5 Feb-6 May-6 Aug-6 Nov-6 Feb-7 May-7 Aug-7 m tonnes source: China s Customs Statistics
Sources of Chinese Iron Ore Imports 4 35 million tonnes 3 25 2 15 1 Brazil Australia India 27Q1 27Q2 27Q3
China Iron Ore Consumption vs Imports 1,4, 1,2, 1,, Imports Consumption 8, 6, 4, 2, 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 tonnes
Asia Steam Coal Demand k tonnes 3,, 2,75, 2,5, 2,25, 2,, 1,75, 1,5, 1,25, 1,, 75, 5, 25, NE Asia SE Asia SW Asia 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21
Key Steam Coal Exporters k tonnes 24, 22, 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 27 21 215 Australia China Colombia Indonesia Khazakstan Russia S Africa USA Vietnam
China Coal Exports 1, 9, 8, 7, Coking Coal Steam Coal 6, k tonnes 5, 4, 3, 2, 1, 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21
China Coal Export Markets k tonnes 22, 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, 2 26 21 S Korea Japan Taiwan Philippines India Hong Kong Turkey Other
China Coal Imports 8, 7, 6, Coking Coal Steam Coal 5, k tonnes 4, 3, 2, 1, 1998 1999 2 21 22 23 24 25 26 27 28 29 21
China Coal Import Sources 35, 3, 2 26 21 25, k tonnes 2, 15, 1, 5, Vietnam Australia Indonesia Mongolia N Korea Russia N Zealand Other
India Coal Imports 16, 14, 12, Coking Coal Steam Coal 1, k tonnes 8, 6, 4, 2, 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215
India: Coal Import Sources 27 Other, 7.9 South Africa, 2.1 Australia, 25.6 Indonesia, 25.2 (million tonnes)
Indonesian Coal Exports 3, 25, 2, k tonnes 15, 1, 5, 1993 1995 1997 1999 21 23 25 27 29 211 213 215
Indonesian Coal Customers 28 35, 3, 25, 2, 15, 1, k tonnes 5, Japan South Korea India Taiwan China Hong Kong Malaysia Italy Thailand Philippines Spain Israel United States
Bauxite Exports Indonesia 14, 18 k tonnes 12, 1, 8, 6, 4, 2, k tonnes % of World 16 14 12 1 8 6 4 2 % of world trade 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215
Nickel Ore Exports Indonesia 4,5 4, k tonnes % of World 4 35 3,5 3 k tonnes 3, 2,5 2, 1,5 1, 25 2 15 1 % of world trade 5 5 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215
Employment
Capesize Employment 1 9 8 7 6 5 4 3 Iron Ore Coal Grain 2 1 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 mdwt per year
Panamax Employment 4 35 Iron Ore 3 25 2 15 1 Coal Grain Bauxite /Alum Phos Rock /Fert Coke 5 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 m dwt per annum Other Dry Trades
Handymax Cargo Breakdown Scrap 6% Other 17% Agribulk 21% Forest Prod 5% Iron Ore 6% Baux/Alum 6% Phos R/Fert 6% Coal 14% Steel 19%
Vessels Employed in Coal 8 Cape Panamax Handymax 7 m dwt per annum 6 5 4 3 2 1 1995 2 26 21
Freight & Markets
Record Spot Rates $ per day 2, 19, 18, 17, 16, 15, 14, 13, 12, 11, 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, cape panamax supramax handymax handysize Commencement of Chinese Rapid Development Chinese Credit Crunch Record Chinese Iron Ore imports Cooling Chinese Steel Demand & Reducing Congestion Jan-99 Apr-99 Jul-99 Oct-99 Dec-99 Mar- Jun- Sep- Dec- Mar-1 Jun-1 Sep-1 Dec-1 Mar-2 Jun-2 Sep-2 Dec-2 Mar-3 Jun-3 Sep-3 Dec-3 Mar-4 Jun-4 Sep-4 Dec-4 Mar-5 Jun-5 Aug-5 Nov-5 Feb-6 May-6 Aug-6 Nov-6 Feb-7 May-7 Aug-7 Nov-7 CAPE Oct 7 194,115 avg Jun 2 9,33 + 2,8%!!! PANAMAX Oct 7 94,977 Avg Jun2 6,431 + 1,477%!!!
Vessel Supply
Bulker Fleet Existing & On Order no of vessels 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 existing fleet on order 2,37 2,75 1,382 935 745 533 449 623 183 88 11 7 Capesize Mini-Cape Post-Pmax Panamax Handymax Handy
Small Handysize (1-24,999 dwt) 9 8 7 on order delivered 6 5 4 3 2 1 <=197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 no of vessels
Large Handysize (25-34,999 dwt) 18 17 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 on order delivered <=197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 no of vessels
Small Handymax (35-44,999 dwt) 14 13 12 11 1 9 8 7 6 5 4 3 2 1 on order delivered <=1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 no of vessels
Large Handymax (45-59,999 59,999 dwt) 28 26 24 22 2 18 16 14 12 1 8 6 4 2 on order delivered <=1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 no of vessels
Ships Keep Getting Bigger Average Dwt 56, 54, 52, 5, 48, 46, 44, 42, 4, 38, 36, 34, 32, 3, 28, 26, 24, 22, 2, Handymax Handy Av. 44,46 Av. 21,17 Av. 56,2 Av. 31,835 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211
Panamax (6-84,999 dwt) 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 on order delivered <=1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 no of vessels
Bulker Fleet Growth low scrap high scrap no scrap 6 55 5 45 4 35 3 25 2 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 m dwt
Shipbuilding Orders from Jan 26 22 2 18 16 14 12 1 8 6 4 2 Tanker Bulker Container Ship general cargo Gas Vehicle Jan-6 Feb-6 Mar-6 Apr-6 May-6 Jun-6 Jul-6 Aug-6 Sep-6 Oct-6 Nov-6 Dec-6 Jan-7 Feb-7 Mar-7 Apr-7 May-7 Jun-7 Jul-7 Aug-7 Sep-7 million GT
Shipbuilding Orders from Jan 26 1% 9% 29 24 8% 63 39 % of ordering 7% 6% 5% 4% 3% 129 75 Other Japan China Korea 2% 1% 121 82 % Dwt GT
Shipbuilding Output 196-21 dwt 14 13 12 11 1 9 8 7 6 5 4 3 2 1 Passenger Vehic Gas Gen Cargo Container Ship Bulker Tanker 196 1962 1964 1966 1968 197 1972 1974 1976 1978 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 million dwt
Forecast Shipyard Capacity million dwt 19. 18. 17. 16. 15. 14. 13. 12. 11. 1. 9. 8. 7. 6. 5. 4. 3. 2. 1.. Korea China Japan ROW World Output 1975 1985 1995 25 27 28 29 21 215
Growing Shipyard Capacity the issues Primary Expansion from New & Inexperienced Chinese Yards Shortage of Skilled Labour Supervision & Quality Control Suffering Steep Rise in Steel Prices Shortage in Supply of Engines & Equipment Financial Pressures on Reputable & Experienced Shipbuilders
Conclusion Dry bulk trade growing at min 3% up until 215 Steel to continue to drive the market China, India biggest drivers not OECD Relative tight balance between vessel supply and demand through 28 Developing oversupply through 29 Significant oversupply in 21 Handysize market has room to breathe due to niche markets, lower oversupply and very old fleet