Chemical Tanker Market Analysis

Transcription

1 A Presentation By A Presentation for AFOA 2013 Chemical Tanker Market Analysis Brian A. Cleary New York 10 October, 2013

2 Vision : SPI s vision is to offer unbounded thought and analysis to create safe, reliable and cost effective bulk shipping and logistics solutions, placing us at the forefront of the industry's best practice. Presence : Services : GLOBAL SHIPBROKING MARKET RESEARCH CONSULTANCY INTEGRATED LOGISTICS SOLUTIONS GENERAL AGENCY 2

3 Contents: Part 1. GDP GROWTH PRODUCT FLOWS FLEET GROWTH Part 2. FATS AND OILS (USA MARKET) Part 3. INDUSTRY ISSUES The contents of this presentation includes information that was derived from the following sources: PIERS, Platts, Drewry Shipping Consultants, CMAI, Tradewinds News, Bloomberg, ICIS, Apic-online, Economics & Statistical Department of American Chemistry Council, IMF, Chem.cn, IE Singapore, Eurostat, Energy Information Administration, financial reports and articles of publicly listed companies. 3

4 Part 1. GDP GROWTH PRODUCT FLOWS FLEET GROWTH 4

5 Market Outlook: Global Economic Outlook Global Economic conditions remain weak. As of July 2013, the IMF projected global growth to remain subdued at less than 4%. Europe still faces sovereign debt issues and will remain in recession for Emerging markets and developing economies are now expected to grow by 6%. Advanced economies are expected to reach growth levels of just over 2% by the end of All areas are expected to improve in

6 Market Demand: US Chemical Flows- Basket Sample of Products Volume (T) US Chemical imports increased considerably in 2011 by 26.3% before coming off slightly to stabilize around 14.3M tons in 2012 US Chemical exports increased significantly in 2011 by 16.2% with volumes stabilizing around 15.1M tons in ,000,000t 16,000,000t 14,000,000t 12,000,000t USA Chemical Import/Export ,685,835t 12,485,365t 12,868,294t 12,765,134t 16,119,830t 14,947,147t 15,054,535t 14,314,650t 10,000,000t 8,000,000t 6,000,000t 4,000,000t 2,000,000t 0t US Chemical Imports US Chemical Exports 6

7 Fleet: Parcel/Product Tanker Fleet Growth DWT in Millions 90 Global Chemical Fleet Development from 2008 to 2016 (Vessel size range upto 53,500dwt) Fleet Added Scrapped Potential Scrapping The global fleet grew by approximately 25% between 2008 and is expected to grow by another 5-6%. The placement of firm orders for delivery in is low and potential scrapping could result in a very small increase in overall fleet growth. 7

8 Fleet: Size Distribution During the boom years, when financing was readily available, Owners, Investors and Shipyards became irrationally exuberant, embarking on ambitious fleet expansion programs. This was coupled with a trend towards larger ships used in inter-continental trades and fewer small ships were built which will lead to tighter supply of vessels to service short sea regional trade lanes. The future will see fewer sophisticated ships to service smaller multi-grade parcels shipped by Producers and Traders on various trade-lanes. Once the demand/supply balance for tonnage tips, the uptrend in the freight curve to lift smaller grades will be steeper than for large lots of commodity chemicals. Global Fleet by Size in 2005 (by number of ships) Global Fleet by Size in 2012 (by number of ships) 23% 8% 9% 13% 47% Under 10k 10-18k 18-28k 28-35k 36-54k 3% 28% 9% 20% 40% Under 10k 10-18k 18-28k 28-35k 36-54k 8

9 Intercontinental Fleet No. of Ships Tons ('00) Intercontinental Fleet 15,000-53,500 DWT 1,915 Ships/68 Million DWT , , , , , , , ,500 Vessel Size 0 No. of Ships Tons ('000) 9

10 Freight Forecast: Supply/Demand Cycles History Repeating itself During freight market upturns, placement of new orders for ships rise resulting in oversupply, which in turn leads to the next freight market down cycle. After nearly 5 years of a poor shipping market, we are at the cross roads of a new cycle. Delivery of new ships is declining, recycling remains at current levels and demand for long-haul transportation is rising. Market Boom Market Boom Market Boom Peak in Vessel Deliveries Peak in Vessel Delivery? Increasing Order Book Increasing Order Book Increasing Order Book Market Downturn Market Downturn Length Length Length 10

11 Freight Trends: US Trade Routes 11

12 Part 2. FATS AND OILS (USA MARKET) 12

13 USA Imports / Exports Exports increased through 2010 but are now in decline Imports have been on the rise since figures reflect imports/exports through June 2,636,000 MT 2,806,000 MT 13

14 USA Exports by Product 14

15 USA Imports by Product Metric Tons 15

16 Protocols for preventing contamination during the shipping of oils in bulk by sea FOSFA - Federation of Oils, Seeds and Fats Assoc. EU1 - European Commission, European Food Safety Authority NIOP - National Institute of Oilseed Products CIQ - China Inspection & Quarantine Services 16

17 USA Imports of FOSFA Acceptable Last Cargoes in 2012 (14,076,000 MT) 17

18 Adjusted USA Imports of FOSFA Acceptable Last Cargoes 2012 (excludes carriage on dedicated ships and only 50% of Caustic Soda) 8,509,000 MT (60%) 18

19 There is better than a 4 to 1 ratio of acceptable inbound cargo for every ton of exports requiring FOSFA acceptable last cargo history. This ratio increases probability of finding cargo tanks with an acceptable last 3 cargo history. 19

20 Part 3. INDUSTRY ISSUES 20

21 THE IMPACT OF SHALE GAS 21

22 THE IMPACT OF SHALE GAS Shale Gas to Ethane to Ethylene to Thousands of Products 100 Chemical Industry Investments announced by March 2013 $71.7 Billion Capital Expenditures Million MT of Bulk Petrochemicals Most Investments geared to Export Markets Economics & Statistical Department American Chemistry Council May

23 THE IMPACT OF SHALE GAS Partial List of New Projects PRODUCER CAPACITY PRODUCTS START-UP DOW/MITSUI 1,500,000 MT EDC/CAUSTIC 2017 CELANESE/MITSU 1,300,000 MT METHANOL 2015 SASOL 1,500,000 MT GLYCOLS 2017 CHEVRON 550,000 MT BASE OILS 2014 INEOS 500,000 MT GLYCOLS 2015 HUNTSMAN 400,000 MT GLYCOLS 2014 WILLIAMS 272,000 MT OLEFINS 2013 WESTLAKE CHEMICAL 200,000 MT CAUSTIC SODA

24 Charter Party Terms that hurt Owner/Operator bottom lines and reduce global capacity for Charterers LOAD TOLERANCE 2% MOLCO 30,000 DWT / 35,000 cubic Cubic Allowance for 2% more (Charterers Option) 602 MT $50/T = $30,100 Lost Revenue Charterer opts to load 2% less (Charterer s Option) 602MT $50/T = $30,100 Lost Revenue 602 MT / 700 CBM 602 MT / 700 CBM Downside Potential $0-$60,200 per voyage Based on 8 voyages per annum the downside could be $240,800 (based on 50% of total downside) Over 25 years this could amount to lost revenue opportunity in excess of $6M 24

25 Charter Party Terms that hurt Owner/Operator bottom lines and reduce global capacity for Charterers LOAD TOLERANCE 2% MOLCO 30,000 DWT / 35,000 cubic Owner/Operators must reserve 2% of total cubic capacity for Charterers who seldom opt to declare up on nominated quantity. 2% of Total Cubic 700 CBM With an average S.G. of 0.86 for products 602 MT 602 MT loss of cargo carrying capability on each voyage 2% Loss in DWT 2% MOLCO contributes toward a reduction in Global Feet Capacity! 5% MOLOO is a Win/Win 25

26 The impact of slow steaming increase speed by 1.0 knot Assumptions: Reduced Speed 14.0 knots Ratio of Sea / Port Time - 65%/35% 30,000 MT Cargo Capacity Laytime 150/150 Reversible TTL DAYS SPEED SEA DAYS SEA MILES PORT DAYS CARGO (MT) , , ,716 (15.82) Increasing Speed by 1.0 Knot Saves Sea Days 26

27 The impact of slow steaming increase speed by 1.0 knot (Cont.) Assumptions: Saved Days Maintain 65/35% ratio to saved days Laytime 150/150 Reversible SAVED DAYS SPEED SEA DAYS PORT DAYS ,972 ADDITIONAL CARGO (MT) Increasing Speed by 1.0 Knot Increases Cargo Capacity by 4.3%. On a Macro Level this could equate to Global Capacity Increasing by the same amount. 27

28 SUMMARY Global economic conditions are expected to improve from 2014 onward Demand for bulk liquid transportation is rising at a rate exceeding GDP growth Current firm orders of new ships and anticipated recycling of old ships will result in a low rate of global fleet growth (1-3%) between The market has already reached the crossroads to an improving shipping market and freight rates are on the rise in most major trade lanes Fats and Oils (Imports/Exports) are relatively steady and not driving the market There are large quantities of Acceptable last cargoes being imported into the USA to meet demands of FOSFA, NIOP and CIQ export requirements Shale Gas Projects are geared toward exports which will further place greater demands on space Owner/Operators will look to improve upon Charter Party Terms to enhance voyage results 28

29 Contact Details Contact : SPI Marine (USA), Inc. Norwalk Cove Marina 50A Calf Pasture Beach Road Norwalk, CT Tel: chartering@spimarineusa.com SPI Marine (Houston), Inc West Loop South Houston, TX Tel: chartering@tx.spimarineusa.com SPI Marine (Asia) Pte. Ltd. 72-a Peck Seah St Singapore Tel: spore@spimarineasia.com SPI Marine Consulting (Shanghai) Co.Ltd. Room 1302, Sino Life Tower, 707 Zhangyang Road, Shanghai Tel: Fax: shanghai@spimarineasia.com SPI Marine (Korea) Ltd Korea Office, Daewoo Building 167 Naesu-Dong, Jongno-Gu Seoul, Korea ( ) Tel: Fax: spore@spimarineasia.com SPI Marine (Oman) Ptv. Oman Representative Office P O Box 474, Falaj al Qabail PC 322, Sohar, Sultanate of Oman Tel: oman@spimarineasia.com