Review of the Shipping Freight Market, Dynamics & Outlook TZMI ...
Review of the Shipping Freight Market, Dynamics & Outlook TZMI 2016 Congress Peter Malpas 9th November 2016 www.braemaracm.com
Disclaimer The information contained within this report is given in good faith based on the current market situation at the time of preparing this report and as such is specific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Braemar ACM Shipbroking (and all associated and affiliated companies) does not accept any liability whatsoever for any errors of fact or opinion based on such facts. Some industry information relating to the shipping industry can be difficult to find or establish. Some data may not be available and may need to be estimated or assessed and where such data may be limited or unavailable subjective assessment may have to be used. No market analysis can guarantee accuracy. The usual fundamentals may not always govern the markets, for example psychology, market cycles and external events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such external events have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is an inherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on the information contained in this report. All information provided by Braemar ACM Shipbroking is without any guarantee whatsoever. Braemar ACM Shipbroking or any of its subsidiaries or affiliates will not be liable for any consequences thereof. This report is intended solely for the information of the email recipient account and must not be passed or divulged to any third parties whatsoever without the written permission of Braemar ACM Shipbroking. Braemar ACM Shipbroking accepts no liability to any third parties whatsoever. If permission is granted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.
For more information, contact Research on +61 (08) 9388 0536
www.braemaracm.com
Braemar ACM Shipbroking Braemar ACM Shipbroking is a wholly owned subsidiary of Braemar Shipping Services PLC a UK-based LSE company comprised of four divisions with shipbroking at its core. Braemar Shipping Services PLC is one of the largest shipping services companies in the world with headquarters in London and regional offices in Aberdeen, Dubai, Shanghai, Beijing, Singapore, Mumbai, New Delhi, Melbourne, Sydney and Perth. The Australian offices have 50 employees, whilst the Group employs over 1,000 people worldwide. Braemar has no principal activities in ship owning or operating.
www.braemaracm.com
Freight Rate Review
www.braemaracm.com
Dry Bulk Segments
Small Handysize Traditional Handysize Large Handysize Handymax Supramax Ultramax Panamax Kamsarmax Post Panamax Mini – Cape Standard Capesize Large Capesize VLOC
10,000 – 24,999 dwt 25,000 – 34,999 dwt 35,000 – 39,999 dwt 40,000 – 49,999 dwt 50,000 – 59,999 dwt 60,000 – 69,999 dwt, Max 199.99m LOA 58,000 – 78,999 dwt, Min 200m LOA 79,000 – 83,799 dwt 84,800 – 100,000 dwt 100,000 – 129,999 dwt 130,000 – 199,999 dwt 200,000+ dwt 200,000+ dwt, Ore carriers www.braemaracm.com
Handysize Average vs. Australian Round Voyage (HS5)
28/10/2016
12,000
10,000
US$/Day
8,000
6,000
4,000
2,000
0
HS5 (LH axis) Source: The Baltic Exchange
Handysize Avg. (LH axis)
www.braemaracm.com
Handysize Supply: Demand 28/10/2016
100
90
Million dwt/ Year
Supply 80
70
Demand 60
50
40
Source: Braemar ACM Research
www.braemaracm.com
But think about capes for a moment … A 172,000 dwt cape in May 2008 earnt at the peak US $234,000 per day. BUT The same ship in February 2016 earnt US $500 per day.
www.braemaracm.com
www.braemaracm.com
Bunker & Crude Oil Prices
28/10/2016
700
140
600
120
500 400 80 300 60 200
40
100 0
20
Singapore 380 CST (LH axis) Source: MABUX/UBS
Crude Spot (RH axis)
www.braemaracm.com
US$/Barrel
US$/Tonne
100
Trade
www.braemaracm.com
Dry Bulk Trade Growth 06/10/2016
6
Billion Tonnes
5
4
3
2
1
0
Iron Ore Agribulk Steel Industry Minor Bulks Other Minor Bulks Source: Braemar ACM Research
Coking Coal Bauxite / Alumina Phosrock / Fertilizers
Thermal Coal Minor Ores Forest Products
www.braemaracm.com
Where is the Growth? A Second Commodity Cycle History tells us that steel intensity peaks ahead of non-ferrous metals (like copper), which in turn peaks ahead of car ownership; plastics use; calorific intake; and residential electricity demand. So while peak steel is an important marker on China’s path to wealth – it is not the ‘beginning of the end’, but the ‘end of the beginning’. (BHPB)
www.braemaracm.com
Minor Dry Bulk Trade Growth 06/10/2016
Billion Tonnes
3.0
2.0
1.0
0.0
Agribulk
Bauxite / Alumina
Minor Ores
Steel Industry Minor Bulks
Phosrock / Fertilizers
Forest Products
Other Minor Bulks Source: Braemar ACM Research
www.braemaracm.com
Impacts on Freight • Growth switching from major bulks to minor bulks Iron Ore => Base Metals Infrastructure => Consumption Raw Materials => semi-processed / value-added
• Less freight intensive, smaller vessels
www.braemaracm.com
Fleet Supply Review
www.braemaracm.com
What has been ordered this year vs. 2015 vs. 2014 (same period)
01/10/2016
200
192
180
Total orders in same period 2016 = 6 ships 2015 = 212 ships 2014 = 606 ships
Number of Ships
160 140 120
100
100 80
62
60 41
40 20 0
30
28 1
3
15
12
1
2014 Source: Braemar ACM Research
19
13
2015
1
2016
www.braemaracm.com
2
What has been scrapped this year vs. 2015 vs. 2014 (same period)
01/10/2016
Total scrapped in same period 2016 = 26.8 Mn Dwt 2015 = 23.8 Mn Dwt 2014 = 12.7 Mn Dwt
Ultramax 4
Supramax
2
2012* = 28.3 Mn Dwt *Record annual scrapping
3 42
Handymax
51 74 31
Large Handysize
53 18 31
Traditional Handysize
48 52 39
Small Handysize
33 29
0
0.5
1 1.5 2 2.5 2014 vs. 2015 vs. 2016 – To Date, DWT Scrapped (Mn tonnes) 2014
Source: Braemar ACM Research
2015
3
2016
www.braemaracm.com
3.5
Bulker Fleet & Orderbook
01/10/2016
2,200 1,967
2,000 1,800
Number of Ships
1,600
1,421
1,400 1,200 1,000 800 600
706 596
561
559
400 176
200 0
6
40
26
Fleet Source: Braemar ACM Research
263
48
Orderbook
www.braemaracm.com
Preference of Larger Handysizes
www.braemaracm.com
Small Handysize
01/10/2016
10,000-24,999 DWT 120
80
60
104
Number of Ships
100
40
33
24
25
34
30
19
4
6
8
8
Source: Braemar ACM Research
9
Fleet
10
6
12
21
16
25
29
34
41
26 13
11
9
5
0
34
20
3 1 2
Orderbook
www.braemaracm.com
Traditional Handysize
01/10/2016
25,000-34,999 DWT 200 180
140 120 100
150
80
107
60
5
76
11
22
34
44
45
40
31
Source: Braemar ACM Research
44
Fleet
45
31
39
36
24
24
6
7
4
10
22
29
36
47
53
0
66
40 20
177
194
Number of Ships
160
Orderbook
www.braemaracm.com
2
Large Handysize
01/10/2016
35,000-39,999 DWT 140 120
30
80
87 74 39 17
8
3
8
Source: Braemar ACM Research
8
Fleet
8
7
2
7
6
5
5
1 1 1 1 2
16
18
2
88
34
20
87
76
40
0
125
60
113
Number of Ships
100
Orderbook
www.braemaracm.com
3
Ballast Water
www.braemaracm.com
Ballast Water Management Legislation – The International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM Convention) will enter into force on 8 September 2017. – The BWM Convention requires ships to manage their ballast water to help prevent the spread of invasive aquatic species which can harm local ecosystems. – This is exactly one year after Finland’s accession of the convention last month and so reaching the necessary percentage of the world’s fleet to trigger the implementation date of the convention. – The BWM Convention was adopted in 2004 by the IMO.
www.braemaracm.com
Handysize Fleet Incl: Small, Traditional and Large Handysize
21/10/2016
350
BWT ready?
Get scrapped at next SS
300
Assumed no BWT Under threat from BWT
200
35 175 112
112
141
104
82
51
53
21
Source: Braemar ACM Research
61
44
58
59
46
54
53
Fleet
63
89
71
56 24
17
21
11
0
171
157
175
50
296
Expect 3rd SS prior to BWT implementation
277
Expect 2nd SS prior to BWT implementation
150 100
BWT as standard
253
Number of Ships
250
Orderbook
www.braemaracm.com
3
Bulker Delivery Schedule Jan 2011
www.braemaracm.com
Disclaimer The information contained within this report is given in good faith based on the current market situation at the time of preparing this report and as such is specific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Braemar ACM Shipbroking (and all associated and affiliated companies) does not accept any liability whatsoever for any errors of fact or opinion based on such facts. Some industry information relating to the shipping industry can be difficult to find or establish. Some data may not be available and may need to be estimated or assessed and where such data may be limited or unavailable subjective assessment may have to be used. No market analysis can guarantee accuracy. The usual fundamentals may not always govern the markets, for example psychology, market cycles and external events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such external events have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is an inherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on the information contained in this report. All information provided by Braemar ACM Shipbroking is without any guarantee whatsoever. Braemar ACM Shipbroking or any of its subsidiaries or affiliates will not be liable for any consequences thereof. This report is intended solely for the information of the email recipient account and must not be passed or divulged to any third parties whatsoever without the written permission of Braemar ACM Shipbroking. Braemar ACM Shipbroking accepts no liability to any third parties whatsoever. If permission is granted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.
For more information, contact Research on +61 (08) 9388 0536
www.braemaracm.com
Braemar ACM Shipbroking Braemar ACM Shipbroking is a wholly owned subsidiary of Braemar Shipping Services PLC a UK-based LSE company comprised of four divisions with shipbroking at its core. Braemar Shipping Services PLC is one of the largest shipping services companies in the world with headquarters in London and regional offices in Aberdeen, Dubai, Shanghai, Beijing, Singapore, Mumbai, New Delhi, Melbourne, Sydney and Perth. The Australian offices have 50 employees, whilst the Group employs over 1,000 people worldwide. Braemar has no principal activities in ship owning or operating.
www.braemaracm.com
Freight Rate Review
www.braemaracm.com
Dry Bulk Segments
Small Handysize Traditional Handysize Large Handysize Handymax Supramax Ultramax Panamax Kamsarmax Post Panamax Mini – Cape Standard Capesize Large Capesize VLOC
10,000 – 24,999 dwt 25,000 – 34,999 dwt 35,000 – 39,999 dwt 40,000 – 49,999 dwt 50,000 – 59,999 dwt 60,000 – 69,999 dwt, Max 199.99m LOA 58,000 – 78,999 dwt, Min 200m LOA 79,000 – 83,799 dwt 84,800 – 100,000 dwt 100,000 – 129,999 dwt 130,000 – 199,999 dwt 200,000+ dwt 200,000+ dwt, Ore carriers www.braemaracm.com
Handysize Average vs. Australian Round Voyage (HS5)
28/10/2016
12,000
10,000
US$/Day
8,000
6,000
4,000
2,000
0
HS5 (LH axis) Source: The Baltic Exchange
Handysize Avg. (LH axis)
www.braemaracm.com
Handysize Supply: Demand 28/10/2016
100
90
Million dwt/ Year
Supply 80
70
Demand 60
50
40
Source: Braemar ACM Research
www.braemaracm.com
But think about capes for a moment … A 172,000 dwt cape in May 2008 earnt at the peak US $234,000 per day. BUT The same ship in February 2016 earnt US $500 per day.
www.braemaracm.com
www.braemaracm.com
Bunker & Crude Oil Prices
28/10/2016
700
140
600
120
500 400 80 300 60 200
40
100 0
20
Singapore 380 CST (LH axis) Source: MABUX/UBS
Crude Spot (RH axis)
www.braemaracm.com
US$/Barrel
US$/Tonne
100
Trade
www.braemaracm.com
Dry Bulk Trade Growth 06/10/2016
6
Billion Tonnes
5
4
3
2
1
0
Iron Ore Agribulk Steel Industry Minor Bulks Other Minor Bulks Source: Braemar ACM Research
Coking Coal Bauxite / Alumina Phosrock / Fertilizers
Thermal Coal Minor Ores Forest Products
www.braemaracm.com
Where is the Growth? A Second Commodity Cycle History tells us that steel intensity peaks ahead of non-ferrous metals (like copper), which in turn peaks ahead of car ownership; plastics use; calorific intake; and residential electricity demand. So while peak steel is an important marker on China’s path to wealth – it is not the ‘beginning of the end’, but the ‘end of the beginning’. (BHPB)
www.braemaracm.com
Minor Dry Bulk Trade Growth 06/10/2016
Billion Tonnes
3.0
2.0
1.0
0.0
Agribulk
Bauxite / Alumina
Minor Ores
Steel Industry Minor Bulks
Phosrock / Fertilizers
Forest Products
Other Minor Bulks Source: Braemar ACM Research
www.braemaracm.com
Impacts on Freight • Growth switching from major bulks to minor bulks Iron Ore => Base Metals Infrastructure => Consumption Raw Materials => semi-processed / value-added
• Less freight intensive, smaller vessels
www.braemaracm.com
Fleet Supply Review
www.braemaracm.com
What has been ordered this year vs. 2015 vs. 2014 (same period)
01/10/2016
200
192
180
Total orders in same period 2016 = 6 ships 2015 = 212 ships 2014 = 606 ships
Number of Ships
160 140 120
100
100 80
62
60 41
40 20 0
30
28 1
3
15
12
1
2014 Source: Braemar ACM Research
19
13
2015
1
2016
www.braemaracm.com
2
What has been scrapped this year vs. 2015 vs. 2014 (same period)
01/10/2016
Total scrapped in same period 2016 = 26.8 Mn Dwt 2015 = 23.8 Mn Dwt 2014 = 12.7 Mn Dwt
Ultramax 4
Supramax
2
2012* = 28.3 Mn Dwt *Record annual scrapping
3 42
Handymax
51 74 31
Large Handysize
53 18 31
Traditional Handysize
48 52 39
Small Handysize
33 29
0
0.5
1 1.5 2 2.5 2014 vs. 2015 vs. 2016 – To Date, DWT Scrapped (Mn tonnes) 2014
Source: Braemar ACM Research
2015
3
2016
www.braemaracm.com
3.5
Bulker Fleet & Orderbook
01/10/2016
2,200 1,967
2,000 1,800
Number of Ships
1,600
1,421
1,400 1,200 1,000 800 600
706 596
561
559
400 176
200 0
6
40
26
Fleet Source: Braemar ACM Research
263
48
Orderbook
www.braemaracm.com
Preference of Larger Handysizes
www.braemaracm.com
Small Handysize
01/10/2016
10,000-24,999 DWT 120
80
60
104
Number of Ships
100
40
33
24
25
34
30
19
4
6
8
8
Source: Braemar ACM Research
9
Fleet
10
6
12
21
16
25
29
34
41
26 13
11
9
5
0
34
20
3 1 2
Orderbook
www.braemaracm.com
Traditional Handysize
01/10/2016
25,000-34,999 DWT 200 180
140 120 100
150
80
107
60
5
76
11
22
34
44
45
40
31
Source: Braemar ACM Research
44
Fleet
45
31
39
36
24
24
6
7
4
10
22
29
36
47
53
0
66
40 20
177
194
Number of Ships
160
Orderbook
www.braemaracm.com
2
Large Handysize
01/10/2016
35,000-39,999 DWT 140 120
30
80
87 74 39 17
8
3
8
Source: Braemar ACM Research
8
Fleet
8
7
2
7
6
5
5
1 1 1 1 2
16
18
2
88
34
20
87
76
40
0
125
60
113
Number of Ships
100
Orderbook
www.braemaracm.com
3
Ballast Water
www.braemaracm.com
Ballast Water Management Legislation – The International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM Convention) will enter into force on 8 September 2017. – The BWM Convention requires ships to manage their ballast water to help prevent the spread of invasive aquatic species which can harm local ecosystems. – This is exactly one year after Finland’s accession of the convention last month and so reaching the necessary percentage of the world’s fleet to trigger the implementation date of the convention. – The BWM Convention was adopted in 2004 by the IMO.
www.braemaracm.com
Handysize Fleet Incl: Small, Traditional and Large Handysize
21/10/2016
350
BWT ready?
Get scrapped at next SS
300
Assumed no BWT Under threat from BWT
200
35 175 112
112
141
104
82
51
53
21
Source: Braemar ACM Research
61
44
58
59
46
54
53
Fleet
63
89
71
56 24
17
21
11
0
171
157
175
50
296
Expect 3rd SS prior to BWT implementation
277
Expect 2nd SS prior to BWT implementation
150 100
BWT as standard
253
Number of Ships
250
Orderbook
www.braemaracm.com
3
Bulker Delivery Schedule Jan 2011
www.braemaracm.com
