Review of the Shipping Freight Market, Dynamics & Outlook TZMI 2016 Congress Peter Malpas 9 th November 2016
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Freight Rate Review
Dry Bulk Segments Small Handysize Traditional Handysize Large Handysize Handymax Supramax Ultramax Panamax Kamsarmax Post Panamax Mini Cape Standard Capesize Large Capesize VLOC 10,000 24,999 dwt 25,000 34,999 dwt 35,000 39,999 dwt 40,000 49,999 dwt 50,000 59,999 dwt 60,000 69,999 dwt, Max 199.99m LOA 58,000 78,999 dwt, Min 200m LOA 79,000 83,799 dwt 84,800 100,000 dwt 100,000 129,999 dwt 130,000 199,999 dwt 200,000+ dwt 200,000+ dwt, Ore carriers
US$/Day Handysize Average vs. Australian Round Voyage (HS5) 28/10/2016 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: The Baltic Exchange HS5 (LH axis) Handysize Avg. (LH axis)
Million dwt/ Year Handysize Supply: Demand 28/10/2016 100 90 Supply 80 70 60 Demand 50 40 Source: Braemar ACM Research
But think about capes for a moment A 172,000 dwt cape in May 2008 earnt at the peak US $234,000 per day. BUT The same ship in February 2016 earnt US $500 per day.
US$/Tonne Bunker & Crude Oil Prices 28/10/2016 700 140 600 500 120 100 400 300 200 80 60 US$/Barrel 100 40 0 20 Source: MABUX/UBS Singapore 380 CST (LH axis) Crude Spot (RH axis)
Trade
Billion Tonnes Dry Bulk Trade Growth 06/10/2016 6 5 4 3 2 1 0 Source: Braemar ACM Research Iron Ore Coking Coal Thermal Coal Agribulk Bauxite / Alumina Minor Ores Steel Industry Minor Bulks Phosrock / Fertilizers Forest Products Other Minor Bulks
Where is the Growth? A Second Commodity Cycle History tells us that steel intensity peaks ahead of non-ferrous metals (like copper), which in turn peaks ahead of car ownership; plastics use; calorific intake; and residential electricity demand. So while peak steel is an important marker on China s path to wealth it is not the beginning of the end, but the end of the beginning. (BHPB)
Billion Tonnes Minor Dry Bulk Trade Growth 06/10/2016 3.0 2.0 1.0 0.0 Agribulk Bauxite / Alumina Minor Ores Steel Industry Minor Bulks Phosrock / Fertilizers Forest Products Other Minor Bulks Source: Braemar ACM Research
Impacts on Freight Growth switching from major bulks to minor bulks Iron Ore => Base Metals Infrastructure => Consumption Raw Materials => semi-processed / value-added Less freight intensive, smaller vessels
Fleet Supply Review
Number of Ships What has been ordered this year vs. 01/10/2016 2015 vs. 2014 (same period) 200 192 180 160 140 120 100 Total orders in same period 2016 = 6 ships 2015 = 212 ships 2014 = 606 ships 100 80 60 40 20 0 1 3 28 12 62 15 13 41 30 19 1 1 2 Source: Braemar ACM Research 2014 2015 2016
What has been scrapped this year vs. 2015 vs. 2014 (same period) 01/10/2016 Ultramax Supramax 2 3 4 Total scrapped in same period 2016 = 26.8 Mn Dwt 2015 = 23.8 Mn Dwt 2014 = 12.7 Mn Dwt 2012* = 28.3 Mn Dwt *Record annual scrapping Handymax 42 51 74 Large Handysize 18 31 53 Traditional Handysize 31 48 52 Small Handysize 29 33 39 0 0.5 1 1.5 2 2.5 3 3.5 2014 vs. 2015 vs. 2016 To Date, DWT Scrapped (Mn tonnes) Source: Braemar ACM Research 2014 2015 2016
Number of Ships Bulker Fleet & Orderbook 01/10/2016 2,200 2,000 1,967 1,800 1,600 1,400 1,421 1,200 1,000 800 600 596 706 561 559 400 200 0 6 40 176 26 48 263 Source: Braemar ACM Research Fleet Orderbook
Preference of Larger Handysizes
Number of Ships Small Handysize 10,000-24,999 DWT 120 01/10/2016 100 80 60 104 40 20 0 5 9 11 13 26 34 41 29 25 16 21 12 6 10 9 19 34 30 34 25 24 33 8 8 6 4 3 1 2 Source: Braemar ACM Research Fleet Orderbook
Number of Ships Traditional Handysize 25,000-34,999 DWT 200 01/10/2016 180 160 140 120 100 80 60 40 20 0 53 4 7 6 10 29 36 47 22 24 24 36 39 31 45 44 31 40 194 177 150 5 34 44 45 76 107 66 22 11 2 Source: Braemar ACM Research Fleet Orderbook
Number of Ships 72 Large Handysize 35,000-39,999 DWT 140 01/10/2016 120 100 80 30 60 113 125 40 76 87 88 74 87 20 34 39 0 18 2 5 1 1 1 1 2 5 6 7 8 83 8 8 16 17 3 Source: Braemar ACM Research Fleet Orderbook
Ballast Water
Ballast Water Management Legislation The International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM Convention) will enter into force on 8 September 2017. The BWM Convention requires ships to manage their ballast water to help prevent the spread of invasive aquatic species which can harm local ecosystems. This is exactly one year after Finland s accession of the convention last month and so reaching the necessary percentage of the world s fleet to trigger the implementation date of the convention. The BWM Convention was adopted in 2004 by the IMO.
Number of Ships Handysize Fleet Incl: Small, Traditional and Large Handysize 21/10/2016 350 300 250 200 Get scrapped at next SS Under threat from BWT Assumed no BWT BWT ready? BWT as standard 150 100 50 0 175 11 21 17 24 56 71 Expect 2 nd SS prior to BWT implementation Expect 3 rd SS prior to BWT implementation 89 53 54 46 59 58 44 63 61 53 82 104 157 253 277 296 171 141 175 35 112 112 51 21 3 Fleet Orderbook Source: Braemar ACM Research
Bulker Delivery Schedule Jan 2011