April 11-13, 2011 Cairo Marriott Hotel, Egypt
Dry Cargo Freight Market Fundamentals
Mr. Nicholas Collins Chief Operating Officer, Clarksons
Dubai
AFA Annual Fertilizers Forum & Exhibition Dry Cargo Freight Market Fundamentals Nick Collins Clarksons Dubai 13th April 2011
Fertilisers constitute 3% of drybulk seaborne trade Drybulk seaborne trade in 2010
Handysize < 40,000 dwt
St l Products Steel P d t 7.6% 7 6% Forest Products 5.2% Pig Iron 0.4% Coke 0.4%
Oth Others 1.8% 1 8% Capesize >100,000 dwt
Iron ore 29.5%
Cement 2.7% Scrap 3.1% Fertilisers 3.3% Agribulks 3.6% Sugar 1.6% Coking coal 8.0% Bauxite/Alumina 2.4%
Grains 10.4%
Steam coal 19.9%
Panamax 60-100,000 dwt
Handy/Supramax 40-60,000 dwt www.clarksons.com
1
Fleet fundamentals
www.clarksons.com
Total fleet and scheduled orderbook Fleet 140
On Order
40% of existing fleet on order (52% in dwt)
8,154 vessels in fleet
120
80 60 40 20 0 <= 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Million dwt
100
www.clarksons.com
2
Existing Fleet and Scheduled orderbook Existing Fleet vs Orderbook (Number) Existing Fleet
2 000 2,000
On Order
1,800 1,600
no of vessels
1,400 1,200
39%
1,000
60%
45% 45%
800 600
10%
7%
400
101%
200
222%
71%
0 Small Handysize (10-25k)
Large Handysize (25-40)
Handymax (40-50k)
Supramax (50-60k)
Panamax (60-85k)
Post Panamax (85-100k)
MiniCape (100-120k)
Capesize (120-220k)
VLOC (220-380k)
Chinamax (380k+)
www.clarksons.com
Existing Fleet and Scheduled orderbook Existing Fleet vs Orderbook (DWT) Existing Fleet
180
On Order
160 140
M illion Dwt
120 100
48%
80
42%
60
47%
62% 12% 72%
40
7%
103%
20
230%
0 Small Handysize (10-25k)
Large Handysize (25-40)
Handymax (40-50k)
Supramax (50-60k)
Panamax (60-85k)
Post Panamax (85-100k)
MiniCape (100-120k)
Capesize (120-220k)
VLOC (220380k)
Chinamax (380k+)
www.clarksons.com
3
Panamax (60-85k dwt) and Post Panamax (85-100k dwt) Fleet Profile Panamax fleet Panamax orderbook
35
942 vessels on order
Post panamax fleet Post p panamax orderbook
1,807 vessels in fleet
30
Million DWT
25 20 15 10 5
<= 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
0
www.clarksons.com
Handymax/Supramax fleet profile 26 24
50-60k dwt Fleet
40-50k dwt Orderbook
50-60k dwt Orderbook
825 vessels on order
2,162 vessels in fleet
16 14 12 10 8 6 4 2 0 <= 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Million dwt
22 20 18
40-50k dwt Fleet
www.clarksons.com
4
Handysize fleet profile 18
10-25k dwt Fleet
25-40k dwt Fleet
10-25k dwt Orderbook
25-40k dwt Orderbook
828 vessels on order
3,026 vessels in fleet
16 14 Million dwt
12 10 8 6 4 2 <= 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
0
www.clarksons.com
40% of drybulk deliveries are slipping
*
Scheduled deliveries
Actual deliveries
18 16 14
10 8 6 4 2
Nov -11
Sep-11
Jul-11
May -11
Mar-11
Jan-11
Nov -10
Sep-10
Jul-10
May -10
Mar-10
Jan-10
Nov -09
Sep-09
Jul-09
May -09
Mar-09
0 Jan-09
Million dw t
12
*Refer to 2010 www.clarksons.com
5
Demolition potential is based on special surveys Capesize
Panamax
Handy/Supram ax (6th,7th,8th)
(6th,7th,8th,9th)
(5th,6th)
(6th,7th,8th)
Handysize
2011
40
40
14
148
2012
39
71
41
227
2013
18
51
35
254
2014
22
56
69
268
119
218
159
897
TOTAL
● SScrapping i is i a function f ti off freight f i ht rates, t ffreight i ht and d special i l survey costs t and d scrap prices. i ● Special surveys are conducted every 5 years when the scrap decision becomes apparent. ● New build orders: ● ● ● ●
Capesize 663 Panamax 942 Handy/Supramax 825 Handysize 828
www.clarksons.com
Drybulk seaborne demand
www.clarksons.com
6
Iron ore trade is expected to continue with its robust growth World seaborne iron ore exports
And will reach over 1bn tonnes in 2011
1300 Other Sweden South Africa India Brazil Australia
1200 1100 1000 800 700 600 500 400 300 200 100 0 2005
2006
5007
2008
2009
2010 (f) 2011(f) 2012(f) 2013(f)
www.clarksons.com
Chinaâ&#x20AC;&#x2122;s coal demand surge continues Import
Export
Net Trade
100
50
0 Million tonnes
Million tonnes
900
-50
-100
-150
-200 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
www.clarksons.com
7
China’s coastal coal trade is growing •Domestic coal production is more than 3.1bn and forecast to exceed 4.1bn by 2015. •Coastal coal trade is more than 450mt and will increase. Heilongjiang
Xinjiang
Liaoning
Beijing Inner Mongolia
400 Million tonnes
Jilin
500
300
200
QINHUANGDAO
Qinghai
100
Tianjin
Hebei Shanxi
Shandong
0 Shaanxi
Tibet
Henan
Yangtze River
Hubei
Sichuan
Im ports
Jiangsu
Guizhou
436 mt 34%
Jiangxi
Gangsu
Yunnan Guangxi
Coastal coal trade
SHANGHAI
Anhui
Zhejiang Hunan
Exports
Fujian
831 mt 66%
Guangdong
Main coal net exporting provinces International coal seaborne trade
Main coal net importing provinces Hainan
Chinese coastal coal trade
www.clarksons.com
Changing trade routes and Fleet inefficiencies
www.clarksons.com
8
South African coal moving East and ships have to ballast South Africa’s coal exports 80 70
Other
Million tonnes
60
Other Asia
50
China
40
India
30
Europe
20 10 0 2005
2006
5007
2008
2009
2010*
•India is South Africa’s largest exporting country with 41% of total export volumes in 2010*. •Exports to China has increased to 11% of total in 2010*. *Jan-Oct annualised
www.clarksons.com
Economic growth will be driven by emerging economies Average Real GDP Growth during 2010-11
Growth in large emerging economies like India and Brazil are largely domestically driven Above 5 Between 3-5 Between 1-3 Below 1 No data Source: IMF, WEO Oct 2010 www.clarksons.com
9
â&#x20AC;Ścausing more trade to shift to the East % Split of cargoes open in the Atlantic and Pacific in 2003 vs 2009 Pacific
Atlantic
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003
2009
2003
Handysize
2009
2003
2009
2003
2009
Capesize
Panamax
Handy/Supramax
www.clarksons.com
Port congestion adds to inefficiencies 400 350
Flooding in Australia adds to the queue
250 200 150 100 50
Auz iron ore India coal and iron ore Saldanha Bay Congestion
Braz iron ore China iron ore discharge
Dec-10
Oct-10
Nov-10
Sep-10
Jul-10
Aug-10
Jun-10
Apr-10
Mar-10
May-10
Jan-10
Feb-10
Dec-09
Oct-09
Nov-09
Sep-09
Jul-09
Jun-09
Aug-09
Apr-09
May-09
Mar-09
Jan-09
Feb-09
Dec-08
Oct-08
Nov-08
Jul-08
Sep-08
Aug-08
Jun-08
Apr-08
May-08
Mar-08
Jan-08
0 Feb-08
Vessels on anchorage
300
Auz coal Richards Bay Congestion
www.clarksons.com
10
Demand and Supply balance
www.clarksons.com
Conclusion ● Fertilisers are predominately shipped in Handy to Supramax vessels. ● General trade is forecast to grow at an average of 5.5% 5 5% per annum over the next 4 years with ton/mile growth higher.
● BUT huge fleet growth will put severe downward pressure on freight rates ● Inefficiencies in fleet utilisation (caused by port congestion and increased ● ● ●
ballasting) will assist keeping freight rates from collapse and therefore freight volatility will continue The medium term demand-supply balance tips heavily towards the supply The larger ships to be the main sufferers. Handy size to be far more resilient because less ess o overbuilt e bu t a and da an o older de fleet eet which c ca can be retired et ed more o e eas easily y In addition fertiliser charterers operating in Red Sea/AG/WC India will incur war risk insurance and very resilient freight rates due to piracy and changing patterns of trade thus may not fully benefit from the general weaker freight market
Thank You! www.clarksons.com
11