where now, where next? martin stopford - clarksons...source: “maritime economic” martin stopford...

Clarkson Dubai Seminar 26th November 2005

Martin Stopford, Clarksons 1

London

Singapore

Shanghai Paris

Genoa

S AfricaHouston

Australia

HongKong

Athens

DUBAI

Pacific Atlantic

Where Now, Where Next?Dubai Seminar, 26th November 2005

Martin Stopford



1. The market today2. Why the market’s so good3. The Forecasting Model4. Ship Demand Trend 5. Ship Supply Trend6. Tanker forecast7. Bulk carrier forecast8. Conclusions

Every time I look there’s

MORE money

• It’s still a very good market after a weak spot in the summer

• The Clarksea index which touched $18,000/day in the summer is now $28,000/day

• Asset prices still very firm, and sales volumes have recovered

It says here it’s still the best market for

a century



The Bulk Shipping Era (Handy Ship)

0

5

10

15

20

25

3019

4619

4819

5019

5219

5419

5619

5819

6019

6219

6419

6619

6819

7019

7219

7419

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

04

earn

ings

$00

0/da

y (e

stim

ate)

1952"Undreamed offreight rates"

1956"Healthy

atmosphere"

1969-70"Firm &healthy"

1973-4"An exciting

market"

1979-80"Rates

boomed"

1982-6"Worst

ever"

1989"Firm"

1995“Boom"

2000“Strong"

2004WOW!

Dry cargo Rates

Source: “Maritime Economic” Martin Stopford

Freight Rates• The Clarksea

Index averaged of $12,400/day in the 1990s,

• Last year, after dipping in the spring, it surged to a new peak of $42,700 a day in November 2004

• This year Clarksea index is back at $28,000/day

05

1015202530354045

Jan-

90Ja

n-91

Jan-

92Ja

n-93

Jan-

94Ja

n-95

Jan-

96Ja

n-97

Jan-

98Ja

n-99

Jan-

00Ja

n-01

Jan-

02Ja

n-03

Jan-

04Ja

n-05

$000/day

The Clarksea Index (tankers, bulkers, The Clarksea Index (tankers, bulkers, containers, gas)containers, gas)

Financial crisis

Asiacrisis

Dot.comcrisis

Dry cargo boom

THEtrough

9/11Asia Crisis



Cycle Position End Oct 2005still above trend

This chart shows average earnings today for the ship type, as a % of the average earnings during the last 7 years

-70% -20% 30% 80% 130% 180% 230%

VLCC 1990sSuezmax

AframaxProducts

CapesizePanamax

Handymax

ChemicalOffshore

VLPGContainer

% deviation from 7 year trend

Investment in New Ships

• Until 2003 investment was running at $23 billion a year

• In 2003/4 $137 billion of new ships ordered

• In 2005 about $75 billion expected

0102030405060708090

1997

1998

1999

2000

2001

2002

2003

2004

$ bill

ion

newb

uild

ing

orde

rs

Tankers BulkGas Container



Second Hand Prices

05

10152025303540455055606570

Jan

'76Ja

n '77

Jan

'78Ja

n '79

Jan

'80Ja

n '81

Jan

'82Ja

n '83

Jan

'84Ja

n '85

Jan

'86Ja

n '87

Jan

'88Ja

n '89

Jan

'90Ja

n '91

Jan

'92Ja

n '93

Jan

'94Ja

n '95

Jan

'96Ja

n '97

Jan

'98Ja

n '99

Jan

'00Ja

n '01

Jan

'02Ja

n '03

Jan

'04Ja

n'05

$ Milli

on p

rice

Aframax Tanker Panamax Bulker (5 yrs)

5 Year old Ships

3 developments “pump primed” the present market

How did I get so smart?



1. Shipping Market Tight Balance • In the 1980s there

was 30% overcapacity

• That finally disappeared in 1997, triggering the first real tanker spike

• Since then the available supply of ships has been very tight 400

500

600

700

800

900

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

M. dwt

Demand Supply

Asia Crisis

?Dot.com

crisis

30%Over

capacity AB

C

D30% 10% 5% 1%

% Overcapacity

2. Chinese Growth

• Sea trade growth started seriously in 1994, following internal reforms in the 1980s

• Imports accelerated in 2000

• Positive OECD Survey published last week

Key Stages in China's Trade Growth

050

100150200250300350400450500550600650

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Sea ExportsSea Imports

Mt

2. Trade takes offin 1994

3. Asia Crisis

setback

1. Internal reforms

4. Steel Investment

overheating?



China Boosted Trade Growth

• China reached 10% world imports in 2004

• Imports in the rest of the world grew 1.5% pa 1998-2004

• Chinese imports averaged 21% pa growth 0

1

2

3

4

5

6

7

8

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

Billi

on T

ons t

rade

0%2%4%6%8%10%12%14%16%18%20%

Chin

a's sh

are o

f sea

impo

rts %

World less China China Imports

Chinese imports

BUT: Highly Focussed Growth

• Between 2002 and 2004 two thirds of China’s import growth was in two commodities;-

• iron ore: which accounted for 39%

• Oil which accounted for 29%

3%4%

16%29%

39%

-2% 8% 18% 28% 38% 48%

% growth 2002-4

Iron oreOil

OtherSoyabeans

CoalSteelGrain

NFM oresWaste paper

Fertilisers



3. End of the Supply Cycle

1963

1967

1971

1975

1979

1983

1987

1991

1995

1999

2003

010203040506070

ScrappingDeliveries

Deliveries 61 m dwt in 1976

Deliveries 60.2 m dwt

in 2004

Last phase of 1970s

scrapping!

Million Dwt

Shipyards expand to replace the ships built in the 1970s boom

27 Year Cycle

Clarkson Research forecasting model

• We only ask for forecasts when the outcome is uncertain

• So forget about being right all the time

• It’s just part of the process of dealing with future uncertainty

• The important thing is to have a well thought out system….



Market Model

• The supply/demand model drives rates– Demand driven by

world economy– Supply driven by

investment and the orderbook

• Volatility increases exponentially as the balance tightens

Trade

Demand

World Fleet

ScrappingOrders

Shipowners

Charterers

FreightRates

Shipprices

Balance$ $

We’re at the top of a business cycle and the economy’s slowing



World Economy

0 0

4% 4% 4%3%

2%

0%

-2%

5%

9%

7%

5%6%

0%

4%

7%

0%

2%

5%

7%

4%

-5%-4%-3%-2%-1%0%1%2%3%4%5%6%7%8%9%

10%

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

% g

rowt

h In

dust

rial o

utpu

t in

year

% OECD & Asia Forecast

1998Asia crisis

2001Dot.com

crisis

1991Financial

crisis

ISSUES•Interest rates•Energy prices

•US deficit•US savings

Sea Commodity Trade

• Dry trade has grown by 600% in the last forty years

• Today 6.3 billion tons of cargo is shipped by sea. That’s one tonne for each person in the world

• The main commodities are coal, grain, minor bulks and containers

• In the last five years the growth trend has speeded up and we have 400 million tons more cargo than the trend forecast suggests 0

1000

2000

3000

4000

5000

6000

7000

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Milli

on to

ns c

argo

OtherGrainCoalIron oreProductsCrude oil

1980sRecession

The China Factor



0102030405060708090

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

Bre

nt $

per

Bar

rel

Oil Price (Brent)Oil Price (real)

High Oil Price (Brent)

• Oil price over the 1980 peak

• Driven by record oil demand increase in 2004 & supply worries (Ivan, Nigeria, N Sea)

• $50/bbl has .5% negative effect on economy

AsiaCrisis

Lots of “Wild Cards” 2003-5• Strike in Venezuela• Congestion in Bosphorus• Hurricanes• Nigerian tribal war• Japanese nuclear

closedown• Fuel switching • Reconstruction of Iraq• Pipelines

These have a bigger impact in a tight market!



1. Orderbook hits record 231 million dwt

2. Deliveries will set new record of 70 million dwt in 2005

3. China’s market share up to 13%

4. Capacity set to increase 30% by 2010

5. Prices down 2.4% in last three months

Enter the Dragon

5 Key Facts

Deliveries & ScrappingBased of World Shipyard Monitor

2007200620052004200320022001

62

906

62

8.5

70.5

60

966

58.7

13.1

71.8

46

843.9

50.4

10.6

61.4

103.9

58

1,024

58.3

13

71.3

24

797.1

27.9

27.1

55

117.2

773.3755.3World Fleet yr end

1813Increase (m dwt)

20.8

28.7

49.5

52.8

17.3Delivery-Scrap

28.3Scrapping

45.6Deliveries

45.4Orders

Dwt of Ships Forecast November 2005

Look at this trend – it shows the increase in the fleet



World Orderbook Hits 236 m dwt

• Since 2002 the orderbook has jumped from 112 m dwt to 236 m dwt

• Orderbook is now 26.9% of the fleet, historically very high

• $59 bn orders in 2003, $80 bn in 2004, $38 bn to may ‘05 0

20406080

100120140160180200220240

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Millio

n Dw

t

LNGLPGMPPCellularCombosTankersBulkers

Almostdoubled 2002-4

0

10

20

30

40

50

60

70

80

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Mill

ion

Dw

t Del

iver

ies

Bulkers TankersCombo ContainerMPP OtherGas OrderbookRequirement

Deliveries To Hit 70 M Dwt in 2006

Shipbuilding output grew at 11% pa

compound 1988 to 2004

Forecast Requirement?



Newbuilding Capacity New High

• Six new yards planned will increase Chinese capacity by 15 m dwt

• Main New Yards are– Quingdao Haixi– Chongming Island– Changzing Islands– Longxue

0

5

10

15

20

25

2003

2013

ARE

A

Millio

n DW

T

Bohai Rim

Yangtze River

Pearl River

Newbuilding Prices Peaked

• Aframax tanker peaked at $53MM in 1990, but new price fell to $33MM in Dec 1999 and today it costs $58.5mill

• Inflation increases were less important than market factors in driving the big increase 2003-5

15

25

35

45

55

65

Jan

'90Ja

n '91

Jan

'92Ja

n '93

Jan

'94Ja

n '95

Jan

'96Ja

n '97

Jan

'98Ja

n '99

Jan

'00Ja

n'01

Jan

'02Ja

n '03

Jan

'04Ja

n '05

Price

$ m

illio

n

Panamax bulkerAframax tankerCapesize



1. Earnings 2005 to date down 15% compared with 2004

2. Tanker demand up 3% in 2005 compared with 6.8% in 2004

3. Fleet forecast to grow 7% this year

Oil in China

Tanker Rates – where we are today

$0$20$40$60$80

$100$120$140$160$180

Jan

'90Ja

n '91

Jan

'92Ja

n '93

Jan

'94Ja

n '95

Jan

'96Ja

n '97

Jan

'98Ja

n '99

Jan

'00Ja

n '01

Jan

'02Ja

n '03

Jan

'04Ja

n '05

$/da

y ea

rnin

gs

VLCC Suezmax Aframax Products

1

2

3

4

5

Asia Crisis

Dot Com Crisis

SARS Crisis

In 1990 we thought the big boom would happen in 1995 but we got the timing wrong due to Russia & North Sea

Five year recessionFive year recession

6



Products Earnings Predicted from Aframax Rates

$0$5

$10$15$20$25$30$35$40$45$50

Jan

'98

Jan

'99

Jan

'00

Jan

'01

Jan

'02

Jan

'03

Jan

'04

Jan

'05

$/day

earn

ings

Products

Model estimate using Aframax Tanker earnings

2000 Products spike

200

250

300

350

400

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Millio

ndwt

ForecastActual

Tanker Demand

• Tanker demand did not grow much between 1996 and 2003 due to two crises & tonmiles

• Forecast suggests growth of about 12 m dwt a year to 2010

Market will need about 12 m dwt pa extra tankers

Five years of weak demand growth



World Oil Demand Still Growing• Oil demand & trade

growth closely related• Growth volatile in the

1990s• Oil demand grew by

2.6 m bpd in 2004, • IEA predicting 1.2 m

bpd for 2005• The forecast is shown

by the dotted line

Million barrels per day increase

-2-1.5

-1-0.5

00.5

11.5

22.5

33.5

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

World oil demand 30 year record growth in 2004

Sea oil tradegrowth

World Oil Demand Forecast

• World oil demand is very cyclical

• Often the swing between the low in the first quarter and the peak in the last is 4 m bpd

• Much of this finds its way into trade, causing rate volatility

707172737475767778798081828384858687888990

1Q99

1Q00

1Q01

1Q02

1Q03

1Q04

1Q05

1Q06

Million bpd world oil demandForecast next year extra 1.7 m bpd

Herenow



China Oil Imports

0.00.51.01.52.02.53.03.54.0

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03Ja

n-04

Jan-

05

Oil Products

Crude Oil

• China’s imports have plateaued this year after three years of rapid growth

Million bpd imports

Chinese Oil Trade Outlook

0123456789

10

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Milli

on b

arre

ls p

er d

ay

Import ForecastProduction ForecastImportsProductionDemand ForecastDemand

• Demand likely to reach 9-10 million bpd in 2010 as “wealth effect” clicks in

• Production only projected to grow 1% pa

• Indicates oil imports of 5-6 m bpd in 2010

Demand Forecast 9.6 m bpd



FSU’s Key Role in Oil Trade• In the last six years FSU

has accounted for a third of the growth of the oil seaborne trade

• This has had a profound effect on the tanker market:-1. Undermined ton miles2. Switched demand to smaller

ships3. Growing demand for ice

class tankers 0.0 1.0 2.0 3.0

USACanadaMexico

S. AmericaEurope

FSUM. East

N. AfricaW. Africa

AsiaROW

m bpd export increase 1999-2004

Chart shows who contributed to growth of oil supply since 1999 –FSU biggest

Russian Oil Export Forecast

• After adding 5 m bpd of exports in the last decade, slower growth is expected in future.

• IEA forecast suggests about 1 million bpd extra by 2010

• That will force Europe back to long haul suppliers 0

123456789

10

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Milli

on b

pd ex

ports

Blacksea

Baltic

Druzhba

Current forecasts show much less growth in the next 5 years (but Caspian up 2.5 m bpd)



Young Tanker Fleet

• The tanker fleet is now very young.

• Only 41 m dwt is 20 years old or more – caps scrapping at 5-6 m dwt per annum

• Category 2 tanker issue is tricky 0

102030405060708090

100110120

20+ 15-19 10-14 5-9 0-4

Milli

on D

wt

VLCCSuezmaxAframaxPanamaxHandy

05

101520253035404550

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Deliveries forecastDeliveriesDemolition forecastOrdersDemolition

Orders

Scrapping profile

More Deliveries, Less Demolition”5.6 m dwt of orders so far in 2005



Fleet Growth 6% 2005, 5.5% 2006 Million dwt

220240260280300320340360380400

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Actual Forecast

Fleet forecast in model scenario

• On this analysis the active fleet will hit 358 m dwt by Dec 2006

• That’s a 35 m dwt increase in two years

Short Term Supply/Demand 2005/6

+11.629.6

18.0

10.0

8.0

2005

+10.126.1

16.0

12.0

4.0

2006Item of Investment

In m dwt

Scrapping 2005

add Demand Growth 2005

Surplus (+) of Deficit (-)

LessOrderbook for delivery Dec 2005

Equals Deliveries needed 2004/5



Medium Term: 2005 to 2010

0

20

40

60

80

100

120

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

$000

per

day

earn

ings

vlccSuezmaxAframaxProducts Suez FcstAfraProd

Quarterly earnings forecast Weakening Market as business cycle

turns down, but lots of spike potential NEXT CYCLEWHAT HAPPENS HERE DEPENDS

ON WHAT INVESTORS DO

1. Heavy deliveries 2. Slowing Asian economy, 3. How long will Chinese

steel demand hold up?

Capesize heads for its terminal

BulkerForecast



Dry Bulk Cycle 1998-2005

05

101520253035404550556065707580859095

100

Jan

'98

Jul '9

8

Jan

'99

Jul '9

9

Jan

'00

Jul '0

0

Jan

'01

Jul '0

1

Jan

'02

Jul '0

2

Jan

'03

Jul '0

3

Jan

'04

Jul '0

4

Jan

'05

July

'05

$ 000

Per

day

Cape earnings Panamax Trans Atlantic TripHandymax

1

2

3

2 year 2 year recessionrecession

Bulk Transport Cost 1973-2005

0

5

10

15

20

25

30

35

40

45

Jan

'73Ja

n '74

Jan

'75Ja

n '76

Jan

'77Ja

n '78

Jan

'79Ja

n '80

Jan

'81Ja

n '82

Jan

'83Ja

n '84

Jan

'85Ja

n '86

Jan

'87Ja

n '88

Jan

'89Ja

n '90

Jan

'91Ja

n '92

Jan

'93Ja

n '94

Jan

'95Ja

n '96

Jan

'97Ja

n '98

Jan-

99Ja

n-00

Jan-

01Ja

n-02

Jan-

03Ja

n-04

Jan

'05

$ Per

TON

Fg 18

Expected freight rate last 12 months $13.4/tonne

Iron Ore Tubarao to Japan



Dry Cargo Trade Changes Trend

• Dry trade has grown by 300% in the last forty years

• Today 1.4 billion tons of cargo is shipped by sea

• The main commodities are coal, grain, minor bulks and containers

• There has been a noticeable change of trend in the last five years

• The reason is of course China

0

200

400

600

800

1000

1200

1400

1600

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Milli

on to

ns c

argo

Iron ore CoalGrain

1980sRecession

China Takes off

1995

Steel Production

• Steel production is up over the last year.

• Increase by area:-– China up 15%– EU up 3%– Japan up 6%– S Korea up

3%

0

5

10

15

20

25

30

Jan

'92Ja

n '93

Jan

'94Ja

n '95

Jan

'96Ja

n '97

Jan

'98Ja

n '99

Jan-

00Ja

n-01

Jan-

02Ja

n-03

Jan-

04Ja

n'05

Millio

n to

ns p

er m

onth

Japan S.KoreaEC-12 China

China’s big growth started in March

2001

32 million tons a

month in Sept



China’s Steel Trade Corrects

• So far collapse of steel imports has been compensated by surge in exports

• During 2003 there was a surge of imports to 4 m tpm as supply could not keep up with demand

• Since January 2004 imports fell and exports have surged.

0

1

2

3

4

5

Jan-

95Ja

n-96

Jan-

97Ja

n-98

Jan-

99Ja

n-00

Jan-

01Ja

n-02

Jan-

03Ja

n-04

Jan-

05

Mt/Month

Steel ImportSteel Export

Import surge In 2003

China Steel Prices Slipping

• Steel prices increased by almost 50% between 2003 and early 2005

• In October they slumped back to their starting point

• The price of rolled steel is expected to rise slightly in the October-December period due to the fast growth of China's investment in fixed assets and industrial production.

3000

4000

5000

6000

Nov-

03

Feb-

04

May-

04

Aug-

04

Nov-

04

Feb-

05

May-

05

Aug-

05

RMB

per t

onne

HRC 2.75mmHRS 1mmPlate 6mm

Source: China Trade Report A



China Iron Ore Production & Imports

0

100

200

300

400

500

600

700

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Milli

on to

ns ir

on o

re

• China produced 279 mt of iron ore in the first three quarters of this year, up 29.6% year-on-year.

• “China will control the growth in iron and steel output in 2006 and give priority to upgrading of quality… and transformation of the growth pattern”.

• “The iron ore producers are expanding production capacity, which will help to strike balance between iron ore supply and demand in general”.

Domestic Iron ore Production

Iron ore imports

+30%

25 33 37 41 44 55 52 5570

92110

143

207

050

100150200250300350400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Millio

ndwt

China Steel & Ore Imports• Steel production

forecast to reach 370 m tons in 2007

• China is already producing 30 million tons a month, so not much growth

• Iron ore imports set to grow about 20 m tons pa – demand for 3 m dwt?

Steel production growth forecast to

slow in 2006/7

Iron oreimports

STEEL PRODUCTION



200

250

300

350

400

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Millio

n dw

t

ForecastActual

Dry Bulk Demand - Forecast

• In 2003 demand grew 6.5% in 2003 and 5% in 2004

• Trend “expansion demand” 10.4 m dwt pa 2005 to 2010

Market will need about 10.4 m dwt pa extra bulkers

Dry Bulk Deliveries & Demolition

0

5

10

15

20

25

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

Millio

n dw

t deli

verie

s / d

emol

ition

Delivery FCST

Deliveries

Demolition

Orderbook 22+ m dwt

pa



Bulk Carrier Age Profile Mar 04

0

5

10

15

20

25

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

000

dwt p

er m

onth

Chart shows deliveries in year26 years Ago

Bulk Carrier Age Profile Mar 04. Over the next four years age related scrapping will only average 6 m dwt per year

Bulk Carrier Deliveries & O/BOctober 2005

23.3

2.0

5.4

5.8

10.1

25.1

2.0

5.4

4.9

12.8

19.6

1.8

4.1

5.8

8

18.4

1.3

3.6

4.2

9.4

11.5

1.3

3.3

1.4

5.4

14.220.5TOTAL

1.5

4.4

4.2

4.1

1.6Handysize

5.1Handymax

8.3Panamax

5.4Capesize

2001 2002 2003 2004 2005 2006 2007

Low deliveries

kicked off the boom



Bulker Supply/Demand 2005/6

• The growth of bulk shipping is driven by China and Asia

• Demand expected to increase by about 15 m dwt in 2005,

• Only 810m dwt in 2006 due to China steel

• Scrapping still low

+6

22.8

16.8

15

1.8

2005

+12.1

25.1

13

10

3.0

2006Item of InvestmentIn m dwt

Scrapping 2005

add Demand Growth in year

Surplus (+) of Deficit (-)

Less Orderbook for delivery

Equals Deliveries needed 2005/6

010,00020,00030,00040,00050,00060,00070,00080,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

$000

per

day

earn

ings

HandyPanamaxCapesizeLine 4

Freight Rate Outlook

Her

e

NEXT CYCLEWHAT HAPPENS

HERE DEPENDS ON WHAT INVESTORS

DO



Peter Drucker “the one management thinker every educated person should read”

“We must start out with the premise that forecasting is not a respectable human

activity and not worthwhile beyond the

shortest of periods”

• Scenario 1: The boom goes on much longer as China/Asia goes from strength to strength

• Scenario 2: volatile market with major recession but with continued strong China growth

• Scenario 3: Supply overhang scenario, and China dented by macro developments

• Scenario 4: It’s the 1990s again

FOUR TANKER SCENARIOS



Handymax Scenarios

0

5

10

15

20

25

30

35

40

Mar '

91Se

p '91

Mar '

92Se

p '92

Mar '

93Se

p '93

Mar '

94Se

p '94

Mar '

95Se

p '95

Mar '

96Se

p '96

Mar '

97Se

p '97

Mar '

98Se

p '98

Mar '

99Se

p '99

Mar '

00Se

p '00

Mar '

01Se

p '01

Mar '

02Se

p '02

Mar '

03Se

ptMa

r '04

Sep

'04Ma

r '05

Sept

$ 000

Per

day

Handymax Earnings

Scenario 4Scenario 4

Scenario 1Scenario 1

Scenario 2Scenario 2Scenario 3Scenario 3

Conclusions1. The market remains tightly

balanced 2. Fundamentals will come

under supply side pressure over next two years

3. China still has growth potential but slowing of bulk and tanker volumes likely

4. World economy forecasts still positive but vulnerable to various risks

5. The expanding supply is “drip feeding” the market and makes the strong earnings difficult to sustain

6. So which of the 4 Scenarios would you go for?

It’s been a fantastic two years for shipowners

Bulk Chartering Ltd



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Singapore

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Australia

HongKong

Athens

DUBAI

Pacific Atlantic

where now, where next? martin stopford - clarksons...source: “maritime economic” martin stopford...

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