The dry bulk freight market: Prospects for recovery?

Transcription

1 MetalBulletin Asian Bauxite and Alumina 2013 The dry bulk freight market: Prospects for recovery? Ralph Leszczynski October 2013, Singapore research ; research@bancosta.it

2 Legal notice: The information and data contained in this presentation is derived from a variety of sources, own and third party s, public and private, and is provided for information purposes only. Whilst has used reasonable efforts to include accurate and up-to-date information in this presentation, makes no warranties or representations as to the accuracy of any information contained herein or accuracy or reasonableness of conclusions drawn there from. Although some forward-looking statements are made in the report, cannot in any way guarantee their accuracy or reasonableness. assumes no liabilities or responsibility for any errors or omissions in the content of this report.

3 usd/day Baltic Exchange Timecharter Averages - last 10 years (source: the baltic exchange, daily data, usd/day) / / / / / / / / / / /2013 Capesize Panamax Handysize The freight market collapsed in the aftermath of the 2008 crisis, and have never really recovered since then was the most challenging year in decades for the shipping industry.

4 usd/day Baltic Exchange Timecharter Averages - last 12 months (source: the baltic exchange, daily data, usd/day) / / / / / / /2013 Capesize Panamax Handysize Following a very disappointing first half of the year, with rates at or below operating costs, the market surged in the third quarter, although this appears now to have been short lived.

5 The Demand Side (Steel, Iron Ore, and Coal)

6 All Seaborne Dry Bulk Trade by Commodity in 2012 (estimate, all bulkcarriers) bauxite/ alumina 2% fertilisers / phosphates 3% cement 3% other 13% iron ore 29% grains 8% steam coal 22% scrap/coke/ pig iron 4% coking coal 6% steel products 9% Dry bulk trade is driven by the steel industry, which between iron ore, coking coal, steel products and scrap, accounts for about half of total volumes. The second largest source of demand is steam coal required for power generation.

7 mln tonnes World Seaborne Iron Ore and Coal Trade (only iron ore, steam and coking coal, estimates, in mln tonnes) % +8% +6% +8% +6% +4% +13% +6% +8% +9% +11% (f) 2014(f) Seaborne Iron Ore and Coal Trade (in mln t) Y-o-Y Growth Growth in global seaborne dry bulk trade averaged about 5 percent over the last decade, led in particular by iron ore and coal trade which expanded by a combined 8 percent annually over the last 10 years.

8 Iron Ore Trade Sweden Canada W. Europe CIS China Japan South Korea India Brazil South Africa Australia Major Iron Ore Exporters in 2012: Australia 494 mln tons Brazil 327 mln tons CIS 50 mln tons South Africa 47 mln tons Canada 34 mln tons India 23 mln tons Major Iron Ore Importers in 2011: China 745 mln tons Japan 131 mln tons EU 128 mln tons South Korea 66 mln tons Taiwan 18 mln tons

9 Coal Trade USA Canada W. Europe Russia China Japan South Korea India Colombia Indonesia South Africa Australia Major Coal Exporters in 2012 (thermal + coking): Indonesia mln tons Australia mln tons Russia mln tons USA mln tons Colombia mln tons South Africa mln tons Major Coal Importers in 2012 (thermal + coking): China mln tons EU mln tons Japan mln tons South Korea mln tons India mln tons Taiwan mln tons

10 million tonnes China - Annual Iron Ore Imports (source: customs data ; in million tonnes) % 33.3% 40.5% 30.0% 21.0% 17.2% 15.7% 41.2% 11.0% 8.5% 4.0% 0-1.3% (f) Iron Ore Imports Y-o-Y Growth Imports of iron oresurged last year, with the country importing 745 million tonnes, an increase of 60 million tonnes or 8.5 percent year-on-year, with a record 71 million tonnes in December

11 mln tonnes China - Monthly Coal Imports - Seasonality (includes steam coal, coking coal and lignite ; in million tonnes per month) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec In the first 9 months of 2013, China s coal imports surged by 14.5 percent year-on-year. In the same period of 2012 growth was 35.8 percent year-on-year.

12 mln tonnes China - Annual Coal Imports (includes coking coal, steam coal, and lignite ; in million tonnes) 40.9% 46.0% 33.9% -21.1% 226.7% 40.2% 20.5% 29.6% Iron Ore Imports Y-o-Y Growth Until 2008 China was a net coal exporter. However, imports have skyrocketed since then, due to a combination of fast growing demand, coal sector restructuring, cheap freight and coal price arbitrage. 30

13 million tonnes China - Monthly Iron Ore Imports - Seasonality (source: customs data ; in million tonnes) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec In the first 9 months of 2013, China s iron ore imports surged by 8.8 percent year-on-year. In the same period of 2012 growth was 8.6 percent year-on-year.

14 Fleet Development (Deliveries, Demolitions, Fleet Growth)

15 Our size definitions for bulkers: VLOC Capesize Post-Panamax 210,000+ dwt 120, ,999 dwt 85, ,999 dwt Panamax 65,000-84,999 dwt * * (for units built before 2000 we apply 60,000-84,999 dwt) Handymax 40,000-64,999 dwt * * (for units built before 2000 we apply 40,000-59,999 dwt) Handysize 20,000-39,999 dwt

16 mln DWT Dry Bulk Deliveries + Orderbook in DWT - Annual (only units over 20,000 dwt - assuming 15% slippage) Handysize Handymax Panamax Post-Panamax Capesize VLOC In the first 9 months of 2013, reported deliveries amounted to only 46.2 mln dwt, which was 44.2 percent less than in the same period of last year. Total deliveries in 2013 as per orderbook should have been around 72 mln dwt, but actual deliveries should not exceed 60 mln dwt due to slippage and cancellations.

17 mln DWT Total Dry Bulk Fleet Growth - with 15% slippage (all units over 20,000 dwt) Important: figures assume that 15% of orders will be delayed to the following year % +6% +5% +8% +17% +15% +11% +5% +5% +2% (f) 2014(f) 2015(f) Dry Bulk Fleet Size (in mln DWT) Y-o-Y Growth Fleet growth over is based on the current orderbook assuming that about 15 percent of orders will be delayed by one year due to slippage, in line with what is being observed with deliveries so far this year

18 mln DWT Dry Bulk Deliveries in DWT - Monthly (only units over 20,000 dwt) / / / / / / / / /2013 Handysize Handymax Panamax Post-Panamax Capesize VLOC In the first 9 months of 2013, we recorded the delivery of 20 VLOCs (for a total of 6.4 mln dwt), 57 Capesizes (11 mln dwt), 31 Post-Panamaxes (3 mln dwt), 148 Panamaxes (11.9 mln dwt), 166 Handymaxes (9.4 mln dwt), and 133 Handies (4.5 mln dwt).

19 mln DWT Dry Bulk Demolitions in DWT - Annual (only units over 20,000 dwt) /2013 Handysize Handymax Panamax Post-Panamax Capesize VLOC In the first 9 months of 2013, tonnage for 17.2 mln dwt was reported sold for scrap, which was 26.9 percent less than in the same period last year.

20 mln DWT Deliveries and Demolitions in DWT - Jan-Sep 2013 (only units over 20,000 dwt) Handysize Handymax Panamax Post-Panamax Capesize VLOC Deliveries Demolitions mln dwt of Capesizes have been delivered so far this year, whilst 5.1 mln dwt have been sold for scrap. The gap is much larger for Panamaxes, where 11.9 mln dwt have been delivered and only 3.5 mln dwt sold for scrap.

21 All Dry Bulk (20,000+ dwt) Age Profile Pie (in DWT) Orderbook/Trading 16.8% yrs (94-98) 11% yrs (89-93) 5% yrs (84-88) 3% 30 yrs + (< 84) 1% up to 5 yrs (blt 09-13) 53% yrs (99-03) 10% 6-10 yrs (04-08) 17% The fleet is now very young, with only about 4 percent of currently trading bulkcarriers are over 25 years old, with another 5 percent currently between 21 and 25 years old. This reduced the potential for further demolition.

22 mln DWT Panamax+Post-Pax Bulk Fleet Growth - with 15% slippage (only units 65, ,999 dwt) Important: figures assume that 15% of orders will be delayed to the following year % +6% +4% +3% +13% +15% +14% +8% +7% +3% (f) 2014(f) 2015(f) Panamax+Post-Panamax Fleet Size (in mln DWT) Y-o-Y Growth Fleet growth over is based on the current orderbook assuming that about 15 percent of orders will be delayed by one year due to slippage, in line with what is being observed with deliveries so far this year

23 mln DWT Handysize Bulk Fleet Growth - with 15% slippage (only units 20,000-39,999 dwt) Important: figures assume that 15% of orders will be delayed to the following year % +8% +1% +3% +2% +5% -1% -1% +0% -2% (f) 2014(f) 2015(f) Handysize Fleet Size (in mln DWT) Y-o-Y Growth Fleet growth over is based on the current orderbook assuming that about 15 percent of orders will be delayed by one year due to slippage, in line with what is being observed with deliveries so far this year

24 mln DWT Dry Bulk Ordering Activity in DWT - Monthly (only units over 20,000 dwt) / / / / / / /2013 Handysize Handymax Panamax Post-Panamax Capesize VLOC 42 million dwt of bulkcarriers have been ordered over the first 9 months of This is 89 percent more than in the corresponding period of last year.

25 usd mln Dry Bulk - 5 Year Old Secondhand Prices - last 10 years (basis Korean built, indicative average, in USD mln) / / / / / / / / / / /2013 Capesize Panamax Supramax Handysize Second hand values have largely followed the fortunes of the charter market, recovering slightly in 2009/2010 and tumbling since the beginning of However, they seem to have bottomed out since the beginning of this year.

26 Final Words (Summary and Conclusions)

27 Freight market still very poor this year, although a (short-lived?) rally seen in Q Demand is driven primarily by iron ore and coal trade, in turn driven by China Demand WAS and IS strong. Trade volumes this year growing strongly The freight market is undermined by massive overcapacity built over the years The peak in deliveries was in 2012 Fleet growth will now slow down sharply but will take years to clear the backlog Low ship prices and fuel-efficient designs will encourage more orders We could see the emergence of a two-tier market based on fuel-efficiency

28 & c. s.p.a. address: via pammatone, genoa (italy) phone: [5631-1] dry - capesize capespmx@bancosta.com s&p salepurchase@bancosta.com dry - panamax capespmx@bancosta.com ship finance financial@bancosta.com dry - handy handy@bancosta.com research research@bancosta.com dry - operation dryoper@bancosta.com insurance insurance@bancostains.it tankers tanker@bancosta.com p&i main.ge@bseag.it containers containers@bancosta.com agency bcagy@bcagy.it yachting yachts@bancosta.it accounting account@bcaccount.it bancosta uk bancosta monaco bancosta sa medioriental london monte carlo geneva dubai phone: phone: phone: phone: info@bancosta.co.uk info@bancosta-monaco.com info@bancosta.ch mena@bancosta.com bancosta oriente bancosta oriente bancosta oriente japan rep.office singapore hong kong beijing tokyo phone: phone: phone: phone: capespmx@bancosta.it bancosta@tokyo.nifty.jp web site : this report has been prepared by research for any enquiries please contact Mr. Ralph Leszczynski on or research@bancosta.com