Freight: A key determinant to future exports?

Transcription

1 MetalBulletin Asian Bauxite and Alumina 2014 Freight: A key determinant to future exports? Ralph Leszczynski October 2014, Singapore group ; research@bancosta.com

2 usd/day Baltic Exchange Timecharter Averages - last 10 years (source: the baltic exchange, daily data, usd/day) / / / / / / / / / / /2014 Capesize Panamax Handysize Despite a series of rallies since the second half of last year, the market remains disappointing for shipowners, with timecharter rates very low by historical standards and only just above running costs. 1

3 usd/day Baltic Exchange Panamax TC Average - Seasonality (source: the baltic exchange, daily data, usd/day) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The Panamax market was in steady decline since the beginning of the year, but seems to have rebounded since July. Over the last 4 months there seems to be a steady positive trend which could last towards the end of the year. 2

4 usd/day Baltic Exchange Supramax TC Average - Seasonality (source: the baltic exchange, daily data, usd/day) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The Supramax market seemed to be following closely the patterns of previous years, and also appeared to be doing pretty well in the first two quarters. However there have been weakness in October. 3

5 The Demand Side (Steel, Iron Ore, and Coal) 4

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. 5

7 mln tonnes World Seaborne Iron Ore, Coal, and Grains Trade (source: DCi + estimates, in mln tonnes) % +9% +7% +5% +4% +10% +6% +7% +6% +7% (f) Seaborne Iron Ore, Coal and Grains 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. 6

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 2012: China 745 mln tons Japan 131 mln tons EU 128 mln tons South Korea 66 mln tons Taiwan 18 mln tons 7

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 8

10 DRY BULK COMMODITIES IN 2014 Steel product exports from China surged by 39.3% y-o-y in Jan-Sep 2014 to 65.4 mln tonnes. China imported 699 mln tonnes of iron ore in Jan-Sep 2014, up 16.3% y-o-y. Iron ore prices are at 5-year lows, undercutting domestic Chinese miners. Chinese coal imports are down by 6.6% y-o-y in Jan-Sep 2014 to 223 mln tonnes, due to ample coking coal stocks from last year, and a surge in hydopower production (+24% y-o-y) which reduced thermal power demand. Indian coal imports will reach 200 mln tonnes this year, as domestic mining struggles to satisfy demand. China imported 52.7 mln tonnes of soybeans in Jan-Sep 2014, up 15.1% compared to the same period last year. Soybean prices have been in free-fall in recent months as a bumper crop is expected in the US, and this will further encourage imports. 9

11 Fleet Development (Deliveries, Demolitions, Fleet Growth) 10

12 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 11

13 units Dry Bulk Deliveries + Orderbook in No. of Units - Annual (only units over 20,000 dwt - assuming 15% slippage) Handysize Handymax Panamax Post-Panamax Capesize VLOC Newbuilding deliveries have certainly declined by at least 40 percent from the levels of

14 units Dry Bulk Deliveries in No. of Units - Monthly (only units over 20,000 dwt) / / / / / / /2014 Handysize Handymax Panamax Post-Panamax Capesize VLOC In the first nine months of 2014 we recorded the delivery of 465 units over 20,000 dwt, for a total of 37.8 million dwt. This included 6 VLOCs (1.7 mln dwt), 66 Capesizes (12.5 mln dwt), 21 Post-Panamaxes (2.1 mln dwt), 121 Panamaxes (9.6 mln dwt), 142 Handymaxes (8.1 mln dwt) and 109 Handies (3.8 mln dwt). This is 16.5% fewer year-on-year. 13

15 units Dry Bulk Demolition Activity in No. of Units - Monthly (only units over 20,000 dwt) / / / / / / /2014 Handysize Handymax Panamax Post-Panamax Capesize VLOC In the first nine months of 2014 a reported 185 units were sold for scrap, for a total 11.5 mln dwt. This included 2 VLOCs (0.6 mln dwt), 22 Capesizes (3.6 mln dwt), 1 Post-Panamaxes (0.1 mln dwt), 37 Panamaxes (2.6 mln dwt), 50 Handymaxes (2.4 mln dwt) and 73 Handies (2.3 mln dwt). This is 36.2% fewer than in the same period of last year. 14

16 units Deliveries and Demolitions in No. of Units - Jan-Sep 2014 (only units over 20,000 dwt) Handysize Handymax Panamax Post-Panamax Capesize VLOC Deliveries Demolitions The largest numerical increase so far this year has been in the Handymax fleet (40,000-64,999 dwt), with 142 deliveries in January-September 2014 offset by only 49 demolitions, that is a net increase of 93 units. 15

17 Projected Panamax+Post-Panamax Bulk Fleet Growth (only units 65, ,999 dwt, in mln dwt) mln DWT % +4% +5% +13% +18% +17% +9% +7% +5% +3% (f) 2015(f) 2016(f) Panamax+Post-Panamax Fleet Size (in mln DWT) Y-o-Y Growth Even after accounting for reasonable slippage and cancellations, the Panamax fleet would continue to expand at 7 percent y-o-y in

18 mln DWT Projected Handymax Bulk Fleet Growth (only units 40,000-64,999 dwt, assuming 15% slippage) % +7% +10% +20% +16% +10% +7% +8% +9% +6% (f) 2015(f) 2016(f) Handymax Fleet Size (in mln DWT) Y-o-Y Growth Even after accounting for reasonable slippage and cancellations, the Handymax/Supramax fleet would continue to expand at 8 percent y-o-y in

19 units Dry Bulk Ordering Activity in No. of Units - Monthly (only units over 20,000 dwt) / / / / / / /2014 Handysize Handymax Panamax Post-Panamax Capesize VLOC Thankfully, fewer newbuilding orders are being placed this year 18

20 Final Words (Summary and Conclusions) 19

21 Freight market still rather poor this year (except for bunker costs!) Demand is driven primarily by iron ore and coal trade, in turn driven by China Despite all the talk of slowing down, bulk commodity trade has done relatively well so far. The freight market is undermined by massive overcapacity built over the years Fleet growth is now slowing down sharply but will take years to clear the backlog Low ship prices and fuel-efficient designs have encouraged more shipbuilding A low oil price environment could increase average speeds a cap on the market 20

22 & c. s.p.a. & 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 bancosta 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@spa.nifty.com web site : this report has been prepared by research for any enquiries please contact Mr. Ralph Leszczynski on or research@bancosta.com Legal notice: The information and data containedin this presentation is derived from a variety of sources, own and thirdparty s, public and private, and is provided for informationpurposes 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-lookingstatements 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.