review of the shipping freight market, dynamics & outlook · review of the shipping freight...
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Review of the Shipping Freight Market, Dynamics & Outlook
TZMI 2016 Congress
Peter Malpas9th November 2016
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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 isspecific 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 beestimated 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 andexternal events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such externalevents have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is aninherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on theinformation contained in this report.
All information provided by Braemar ACM Shipbroking is without any guarantee whatsoever. Braemar ACM Shipbroking or any of its subsidiaries oraffiliates 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 withoutthe written permission of Braemar ACM Shipbroking. Braemar ACM Shipbroking accepts no liability to any third parties whatsoever. If permission isgranted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.
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Braemar ACM ShipbrokingBraemar ACM Shipbroking is a wholly owned subsidiary of Braemar ShippingServices PLC a UK-based LSE company comprised of four divisions with shipbrokingat its core.
Braemar Shipping Services PLC is one of the largest shipping services companies inthe 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 1,000people worldwide. Braemar has no principal activities in ship owning or operating.
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Freight Rate Review
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Small Handysize 10,000 – 24,999 dwt
Traditional Handysize 25,000 – 34,999 dwt
Large Handysize 35,000 – 39,999 dwt
Handymax 40,000 – 49,999 dwt
Supramax 50,000 – 59,999 dwt
Ultramax 60,000 – 69,999 dwt, Max 199.99m LOA
Panamax 58,000 – 78,999 dwt, Min 200m LOA
Kamsarmax 79,000 – 83,799 dwt
Post Panamax 84,800 – 100,000 dwt
Mini – Cape 100,000 – 129,999 dwt
Standard Capesize 130,000 – 199,999 dwt
Large Capesize 200,000+ dwt
VLOC 200,000+ dwt, Ore carriers
Dry Bulk Segments
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Handysize Average vs. Australian Round Voyage (HS5)
0
2,000
4,000
6,000
8,000
10,000
12,000
US$
/Day
HS5 (LH axis) Handysize Avg. (LH axis)
Source: The Baltic Exchange
28/10/2016
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Handysize Supply: Demand
40
50
60
70
80
90
100
Mill
ion
dw
t/ Y
ear
Demand
Supply
Source: Braemar ACM Research
28/10/2016
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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 $500 per day.
But think about capes for a moment …
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Bunker & Crude Oil Prices
20
40
60
80
100
120
140
0
100
200
300
400
500
600
700
US$
/BarrelU
S$/T
on
ne
Singapore 380 CST (LH axis) Crude Spot (RH axis)
Source: MABUX/UBS
28/10/2016
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Trade
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Dry Bulk Trade Growth
0
1
2
3
4
5
6
Bill
ion
To
nn
es
Iron Ore Coking Coal Thermal CoalAgribulk Bauxite / Alumina Minor OresSteel Industry Minor Bulks Phosrock / Fertilizers Forest ProductsOther Minor Bulks
06/10/2016
Source: Braemar ACM Research
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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)
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Minor Dry Bulk Trade Growth
0.0
1.0
2.0
3.0
Bill
ion
To
nn
es
Agribulk Bauxite / Alumina Minor Ores
Steel Industry Minor Bulks Phosrock / Fertilizers Forest Products
Other Minor Bulks
06/10/2016
Source: Braemar ACM Research
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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
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Fleet Supply Review
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1
28
100
15
30
192
312
62
1319
41
1 1 20
20
40
60
80
100
120
140
160
180
200
Nu
mb
er o
f Sh
ips
2014 2015 2016
Source: Braemar ACM Research
What has been ordered this year vs. 2015 vs. 2014 (same period) 01/10/2016
Total orders in same period
2016 = 6 ships
2015 = 212 ships
2014 = 606 ships
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29
52
18
74
3
33
48
53
51
2
39
31
31
42
4
0 0.5 1 1.5 2 2.5 3 3.5
Small Handysize
Traditional Handysize
Large Handysize
Handymax
Supramax
Ultramax
2014 vs. 2015 vs. 2016 – To Date, DWT Scrapped (Mn tonnes)
2014 2015 2016
Source: Braemar ACM Research
01/10/2016
What has been scrapped this year vs. 2015 vs. 2014 (same period)
Total scrapped in same period
2016 = 26.8 Mn Dwt
2015 = 23.8 Mn Dwt
2014 = 12.7 Mn Dwt
2012* = 28.3 Mn Dwt
*Record annual scrapping
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Bulker Fleet & Orderbook
596
1,421
706
561
1,967
559
6 40
176
26 48
263
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
Nu
mb
er
of
Ship
s
Fleet Orderbook
Source: Braemar ACM Research
01/10/2016
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Preference of Larger Handysizes
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Small Handysize10,000-24,999 DWT
10
4
5 9 11
13
26
34
41
29 25 1
6
21 1
2 6
10 9
19
34 30
34 2
5 24
33
8 8 6 4 3 1 20
20
40
60
80
100
120
Nu
mb
er
of
Ship
s
Fleet Orderbook
01/10/2016
Source: Braemar ACM Research
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Traditional Handysize25,000-34,999 DWT
53
4 7 6
10
29
36
47
22
24
24
36
39 3
1
45 44 3
1
40
66
10
7
19
4 17
7
15
0
76
45 44 3
45
22 1
1 20
20
40
60
80
100
120
140
160
180
200
Nu
mb
er
of
Ship
s
Fleet Orderbook
01/10/2016
Source: Braemar ACM Research
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Large Handysize35,000-39,999 DWT
18
2 5 1 1 1 1 2 5 6 2 7 7 8 8 3 8 8
16
34
76
11
3
87
88
12
5
74
30
87
39
17 3
0
20
40
60
80
100
120
140
Nu
mb
er o
f Sh
ips
Fleet Orderbook
01/10/2016
Source: Braemar ACM Research
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Ballast Water
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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.
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Handysize FleetIncl: Small, Traditional and Large Handysize
17
5
11
21 17
24
56
71
89
53
54 46
59 58 4
4
63 61 53
82
10
4
15
7
25
3
27
7
29
6
17
1 14
1
17
5
11
23
5
11
2
51
21 3
0
50
100
150
200
250
300
350
Nu
mb
er
of
Ship
s
Fleet Orderbook
Source: Braemar ACM Research
21/10/2016
Assumed no BWT
BWT ready?
BWT as standard
Get scrapped at next SS
Expect 3rd SS prior to BWT implementation
Expect 2nd SS prior to BWT implementation
Under threat from BWT
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Bulker Delivery Schedule
Jan 2011