17 TH IMPCA ASIAN METHANOL CONFERENCE NOVEMBER, SINGAPORE 1 METHANOL SHIPPING: A SNAPSHOT KARAN GROVER SHIP BROKER BRAEMAR QUINCANNON PTE LTD

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1 17 TH IMPCA ASIAN METHANOL CONFERENCE NOVEMBER, SINGAPORE 1 METHANOL SHIPPING: A SNAPSHOT KARAN GROVER SHIP BROKER BRAEMAR QUINCANNON PTE LTD

2 2 AGENDA BQ Introduction Methanol Dynamics in Brief Methanol Shipping - Overview Requirements Typical Methanol Carrier Tonnage Profile Shipping Economics & Freight Rates Shipping Markets New SECA Regulations Methanol as a Marine Fuel? Summary & Q/A

3 3 BRAEMAR QUINCANNON PTE LTD Independent Shipbrokers established in 1998 in Singapore as a Joint Venture between BRAEMAR ACM & QUINCANNON ASSOCIATES w/ a Sister Company BQ Shanghai Ship Brokering Business for Bulk Shipments Methanol and Derivatives / Chemicals / Specialty Liquids Petrochemical Gases Veg Oils & Derivatives / Ethanol / Lube-Base Oils / CPP Special Projects, Research and Consulting 22 Staff located in Singapore 12 Brokers w/ Shipping Background 8 Post Fixture & Operations support Staff Dedicated Demurrage Analysts Dedicated Research Analysts

4 4 METHANOL IS AMONGST THE LARGEST TRADED CHEMICAL COMMODITIES

5 5 METHANOL DYNAMICS Current Demand ~60 M Tons ~38% of Demand is for the Energy Sector Asia accounts for 68% of the Demand ~54% of Demand is in China! By Derivative By Region SOURCE: MMSA AND METHANEX; METHANEX INVESTOR PRESENTATION / AUGUST 2014

6 6 GLOBAL METHANOL DEMAND Steady Uptrend in Demand Driven by the Energy Sector 45 M Tons in 2009 > 60 M Tons in 2013 > ~80 M Tons in 2017* SOURCE: MMSA

7 7 METHANOL TRADE FLOWS SOURCE: MMSA

8 8 METHANOL TRADE FLOWS REQUIRE SHIPPING ON SPECIALIZED TANKERS

9 9 SHIPPING Methanol is shipped in Specialized Tankers with following attributes: IMO Classification IBC Code Type III or Up Compatible Tank Coating Stainless Steel / Marine Line / Zinc Epoxy Coated Tanks are NOT RECOMMENDED to carry Methanol Stripping Capacity (MARPOL Category Y ) Acceptable residue per Tank (75 ltrs 150 ltrs per tank) Inerting / Purging Ability For Tanks over 3000 CBM

10 10 CHEMICAL v PRODUCT / CRUDE TANKER CHEMICAL TANKER CRUDE OIL TANKER

11 11 A TYPICAL IMO 2/3 TANKER

12 12 TYPICAL METHANOL CARRIER Size Range: 13,000T DWT upto ~ 50,000T DWT Average Speed: Knots Days Transit from SE Asia to Mid China Days Transit from New Zealand to Mid China Days Transit from Middle East to Mid China Days Transit from US Gulf to Mid China Ability to Load & Carry Multiple Cargoes Multiple Tanks w/ Individual Manifold, Pumps and Lines for Each Tank Average Size has Increased Over the Years

13 13 A TYPICAL CHEMICAL TANKER - SCHEMATICS

14 14 GLOBAL IMO 2/3 TONNAGE ~ 2550 ~38.85Mt DWT / ~43.2M CBM IMO II / III Classed Ships carrying Chemicals & Veg Oils on Water Today & Another 250 Expected in the Next 3 Years Quality Methanol Tonnage / 26.5 MIL CBM 6.7 MIL CBM Zinc Space 4.4 MIL CBM Marine Line Space 15.4 MIL CBM Stainless Steel Space Young Fleet ~ Average Age of 10.6 Yrs (~314 Ships) (~337 Ships) (~1075 Ships) Average Age of Scrapping is 27 Yrs 630 Ships over 15 Yrs Old and 317 Ships over 20 Yrs Old There is an Imbalance in Supply & Demand w/ Excess Tonnage to cope till

15 # OF SHIPS NEW BUILDS & SCRAPPING ( ) ~1165 SHIPS ADDED SINCE MT DWT SOURCE: BQ IN-HOUSE DATA

16 16 SHIPPING MARKETS ARE UNDER PRESSURE

17 17 VESSEL ECONOMICS 45K DWT TANKER Financial Cost: New Build Cost Daily Finance Cost $44 MIL $8,500 (80% 6% Over 12 Yrs) Vessel Daily Operating Costs: Crew $3,500 Maintenance $2,000 Insurance $700 Administration $800 Break Even / Lay-Up $7,500 T/C Break Even Current T/C Rates Residual Scrap Value $16,000 / Day $14,000 - $15,000 / Day $5.2 MIL (11500 USD 450 ~ 25 YRS)

18 FREIGHT PER MT 18 FREIGHT RATES TO MID CHINA BUNKER & METHANOL CFR PRICE PET MT *METHANOL PRICE DATA PROVIDED BY METHANOL MARKET SERVICES ASIA (MMSA)

19 19 CURRENT SHIPPING MARKETS Over Capacity of Tonnage Continues Shipping Markets are Still Soft Slow Year w/ more of same projected for 2015 Owners still Struggling Earnings & Sentiments Weaker & Compared to 2013 Increased Costs in the Short Term due to New SECA Regulations Iran stable & an Eco-System by Itself Slight Premium on Rates, But Ships Available

20 20 METHANOL AS A MARINE FUEL?

21 21 NEW SECA REGULATIONS Effective 1 JAN 2015: 0.10% Sulphur Content in Fuels in SECA Increased OPEX Costs for Owners 200 Nautical Miles area US & Candian Coastlines

22 22 METHANOL AS A MARINE FUEL? Global Impact by 2020 Methanol is Cheaper / Easier Alternative than LNG/CPP as a Bunker (Marine) Fuel

23 23 THE IMPORTANCE OF SHIPPING TO THE METHANOL BUSINESS CANNOT BE OVER EMPHASIZED.

24 24 SUMMARY Methanol is one of the Largest Traded Commodities & Methanol Demand is expected to Continue to Grow Methanol Requires to be Shipped on Specialized IMO Tankers Current Freight Rates are Low and Shipping Markets are expected to remain Soft in the Short-Medium Term Shipping Costs are a Substantial Percentage of the Total Cost, compared to other Commodities Methanol is a Potential Complimentary Marine Fuel For a World-Scale plant (1.5 Mil Tons) an Optimization on Freight of just USD 1 represents a USD 30 Mil in Savings over 20 Years!

25 25 Q & A THANK YOU

26 26 BRAEMAR QUINCANNON PTE LTD 1 PICKERING STREET #08-01 GREAT EASTERN CENTRE SINGAPORE T: CHEMS@BQ.COM.SG