Iron Ore Shipping Market in 2011

Transcription

1 Iron Ore Shipping Market in 2011 China Iron Ore Conference Beijing 24 th March Whilst care and attention has been taken to ensure that the information contained is accurate, it is supplied without guarantee. SSY Consultancy & Research can accept no responsibility for any errors or omissions or consequences arising therefrom.

2 capesize iron ore spot rates to China: monthly averages W.Australia Brazil Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 $/t

3 freight s share of delivered price to China: basis contract iron ore and spot cape rates Australia Avg Brazil Avg Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 % Share

4 sources of freight market weakness loss of export cargo availability coal from Queensland, Colombia & Canada iron ore from Australia & Brazil rapid growth in fleet supply record newbuilding deliveries in 2010 with further acceleration in 2011 more Capesize vessels delivered in the first 2 months of 2011 than in the whole of 2008! Japanese earthquake

5 capesize cargoes by quarter M Tonnes

6 record net fleet growth in Additions Deletions +23.3% MDwt % +17.5% +12.8% Handysize Handymax Panamax Capesize

7 quarterly dry bulk carrier deliveries by size Capesize Panamax Handymax Handy q08 2q08 3q08 4q08 1q09 2q09 3q09 4q09 1q10 2q10 3q10 4q10 1q11(f) m dwt

8 capesize market shock October 2010: capesize average spot earnings of $42,500/day as new monthly highs for iron ore exports from Australia & Brazil, coal from Richards Bay plus historically high coal exports from Australia & Colombia from October 2010 to January 2011 capesize export cargoes drop by an estimated 15%, while cape fleet increases by 6.5% over the same period approximately 20+% decline in capesize fleet utilisation in just 3 months before disaster in Japan

9 what can revive the freight market? end to weather-related disruptions imply potential for major rebound in trade raw material and steel prices indicative of underlying strength in cargo demand charterers ability to pay congestion/fleet efficiency factors withdrawal of tonnage/scrapping

10 annual growth in seaborne dry bulk trade Iron Ore Coal Million tonnes e 2011f

11 SSY capesize iron ore port congestion index for China Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 Weighted average delays (days)

12 dry bulk shipbuilding activity by country Mdwt Other China S.Korea Japan

13 capesize fleet (100+ kdwt) by year of build On Order Existing Includes new generation of VLOCs Mdwt Pre

14 Vale s China-max strategy: structural change in the capesize market Vale to control 35/36 new built China-max vessels of approx 400,000 dwt plus fleet of 12 converted VLCCs of approx 300,000 dwt, as well as existing owned/chartered conventional capes dedicated VLOC fleet capable of carrying Mt year of fronthaul iron ore cargoes supplemented by Asian-led orders for 300/320 kdwt VLOCs ( Mt/yr of extra carrying capacity) China-maxes require new terminals in China and Oman plus trans-shipment centre in Malaysia

15 panamax fleet (60-99 kdwt) by year of build On Order Existing Pre Mdwt

16 handymax fleet (40-59 kdwt) by year of build On Order Existing Pre Mdwt

17 projected net fleet change in Additions Deletions 39.7 Mdwt +18.8% 35.0 MDwt Mdwt +12.7% 15.9 Mdwt +11.7% Mdwt +2.6% Handysize Handymax Panamax Capesize

18 conclusions temporary disruptions to export cargoes imply potential for dry bulk carrier demand to rebound from current levels but positive impact on freight rates likely to be blunted by record newbuilding programme capes face the biggest problem of oversupply with panamax/post-panamax deliveries also set to accelerate potential for charterers to secure freight cover at levels far below the average for the past 7-8 years

19 capesize freight rates: spot earnings, period rates & ffa forward curve 200, ,000 Actual 4 TCs 160,000 FFA 23/03/11 140,000 1 Year Period $/day 120, ,000 80,000 5 year Period 60,000 40,000 20,000 0 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13

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