Outlook Overview
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LPG Exports
Exports via VLGC from
North America is
estimated to continue
growing.
Middle East growth rate
slows down due to
Iranian sanctions and
OPEC cuts.
LPG Imports
A new wave of PDH
plants come onstream in
China and South Korea
in 2019.
Retail demand from
emerging markets in
Asia such as India,
Indonesia remain strong.
Fleet supply
Order book stands at
14% of the total fleet.
85% of the newbuild
orders are backed by
traders/TCs.
Ton-mile
Ton-mile demand is
expected to increase
driven by sustained
export growth from the
U.S.
But increasing newbuild
activities could offset the
growing ton-mile
demand.
Freight rates
At current fleet supply
level, VLGC rate is
estimated to gradually
recover.
However, seasonality,
change of behaviors and
technology would make
the freight market less
optimistic.
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VLGC freight market in last 3 years
-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19
Cash breakeven TCE
Source: Clarksons Historical, BW Analysis
For the past 3 years, TCE
has been mostly under
industry cash breakeven
levels at ~$25,000/day
Jan 2019 avg.TCE
= $15,000/day
FREIGHT RATES
4Source: IHS Waterborne, NGL Strategy Research
LPG exports
15% 19%24% 28% 32% 35% 38% 40%
51% 46%43%
43% 40%41% 40% 38%
34% 35% 33% 29% 28% 24% 23% 22%
0%
20%
40%
60%
80%
100%
2013 2014 2015 2016 2017 2018 2019F 2020F
North Americas Middle East Others
North America is estimated to
become the largest exporting region
Key Export Regions – Yearly Market Share Forecast
-
10
20
30
40
2013 2014 2015 2016 2017 2018 2019F 2020F
Mill
ion
to
ns
North Americas Middle East
Key Export Regions – Yearly Forecast
North America exports continue
to grow, Middle East stabilises
LPG EXPORTS
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LPG imports
Source: IHS Waterborne
15.2
10.4 9.8
7.3 7.4
12.2
16.5
10.912.0
7.56.2
10.2
17.4
10.7
12.5
8.26.8
11.2
-
2
4
6
8
10
12
14
16
18
20
China Japan India Southeast Asia South Korea Europe
Millio
n t
on
s
2016 2017 2018
Stable
Stable
LPG IMPORTS
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Narrowing arbitrage from US to FE
Source: Argus, BW Analysis
Note: 2015 terminal cost is assumed based on average terminal cost in 2016, 2017 and 2018
($100)
($50)
-
$50
$100
$150
$200
$250
$300
$350
-
$100
$200
$300
$400
$500
$600
$700
$800
US
$/ton
US
$/to
n
Implied Arbitrage (RHS) FE Propane price US Propane price
Implied Arbitrage = FE propane CFR price (M+1) – Mount Belvieu FOB price – Terminal costs
FREIGHT RATES
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VLGC fleet development
Source: Clarksons Historical, BW Analysis
26
11
26
11 9
3 2
138
35
46
25
10
18 19
1
-1-2
-7 -6-4
-6-3
-2 -2
-5 -6-4
100 102 98
129137 140 140 137
152142
179
227
260 265277
292 293
-50
0
50
100
150
200
250
300
350
(10)
-
10
20
30
40
50
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
Recycling Potential Recycled
To be delivered Delivered
Total numebr of VLGC by year-end (RHS)
Fleet size has almost doubled in 6 years from 2014 to 2019
14% of
orderbook
FLEET SUPPLY
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VLGC asset price
Source: Clarksons Historical, BW Analysis
$73
$47
$65
$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
Mill
ion
US
$
Newbuild VLGC delivered price Avg. Stock Market Price in NBE 5-year old NBE price
FLEET SUPPLY
Entry Barriers
BehaviorsTechnology & Innovation
Lower barrier
to entry
Increase efficiency
and transparency Charterers increase
their controls of ships
Disruptions in shipping
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Technology giants are eyeing at shipping industry
10
Technology
+
Tech giants with
high capitals
Increased
efficiency and
transparency in
shipping
Pressures on
margin
How BW LPG “Think Different”
LPG Propulsion
Fuel for the future
Smart ShipInnovating for the future
Product ServicesFully integrated product delivery
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No deviation
Deck tanks
Round voyage
Economical
Fuel flexibility
Clean
Green Efficient Flexible Approved
BW LPG is charting a sustainable future through LPG propulsion
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Cost Efficient Today & Tomorrow
Houston - Chiba - Ningbo - Houston via Panama Canal
LPG HFO Compliant Fuel
Assumptions
Fuel prices Distance: 20,534 nm
USD/mt 2019 YTFeb 2020E Speed: 16 knots, 5% sea margin
LPG 370 350
ULSHFO 480 450 Carrying capacity 49.370 mt
HFO 400 310 LPG available for fuel or sales 2.770 mt
LPG fuel autonomy @ 36.5 tons per day 76 days
Calculation includes Pilot Fuel consumption - Houston - Chiba - Ningbo - Houston (via Panama Canal) 57 days
Safety range 19 days
Source: Argus, TFS 12/2/2019
Fully ref Propane @ sg of 0.58
-
5,000
10,000
15,000
20,000
25,000
2019 YTFeb 2020E
Fuel cost USD/day USD 6,600
per day savingsUSD 6,200
per day savings
LPG HFO Compliant Fuel
LPG HFO Compliant Fuel
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Embracing Innovation with
Smart Ships in Action
Aimed at turning ships into digital enterprises,
the smart ship project connects and controls
the entire ecosystem within the vessel and
transmits data to a digital cloud for remote
monitoring and greater business value.
Key Advantages
Improved furl consumption
Enhanced operation efficiency
Increased compliance
Improved crew safety
Reduced risk of collisions
Lower manpower needs
Lower OPEX expenses
Reduced injury & cargo loss claims
Reduced human error with greater
automation
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Commercial Services At a Glance
Approx. USD 2 Billion invested in VLGC’s
49 vessels, average age of owned VLGCs at 7 years (Global average age 9 years)
Entered the gas transportation business in 1978 and have grown from 6 to 47 VLGCs
Flexible Chartering SolutionsCoA / Time Charter, SPOT, Storage / STS
Assets
Fleet
History
Chartering
Projects
24/7 Customer services
Dedicated team
bringing together
over 100 years of
market experience
Sale and purchase, newbuilding, adjacent segments
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Product Services Team
A team of 5 dedicated
professionals with over 60 years
of LPG and trading experience
in blue chip organizations
Approx. USD 2 Billion invested
in VLGC’s
Transported over 13 Million tons of LPG in 2018
State of the art systems to support cargo delivery
A low-risk and fully-integrated product delivery service to customers
Assets
Experience
Systems
Service
Trade FinanceSupport from BNP Paribas
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Projects
Sale and
PurchaseChartering
Technical
Operations
Enhancing Our
Value PropositionProviding integrated product and shipping solutions
Product
Services
OSLOChartering
Technical & Operations
SINGAPOREChartering
Product Services
Projects
Technical & Operations
HOUSTONTechnical & Operations
Product Services : [email protected]
Chartering : [email protected]
Projects : [email protected]
Fleet Technical : [email protected]
Operations : [email protected]
Contact Us
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https://www.bwlpg.com/investor-centre
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