dry bulk sub-panamax outlook

DRY BULK SUB-PANAMAX OUTLOOK

Imformed – April 2017

1. QUICK RECAP

Looking Back

2

DRY BULK FREIGHT RATES IN CYCLICAL BOOM & BUST

0

50

100

150

200

250

Jan 0

0

Jun 0

0

Nov 0

0

Apr

01

Sep 0

1

Feb 0

2

Jul 02

Dec 0

2

May 0

3

Oct

03

Mar

04

Aug 0

4

Jan 0

5

Jun 0

5

Nov 0

5

Apr

06

Sep 0

6

Feb 0

7

Jul 07

Dec 0

7

May 0

8

Oct

08

Mar

09

Aug 0

9

Jan 1

0

Jun 1

0

Nov 1

0

Apr

11

Sep 1

1

Feb 1

2

Jul 12

Dec 1

2

May 1

3

Oct

13

Mar

14

Aug 1

4

Jan 1

5

Jun 1

5

Nov 1

5

Apr

16

Sep 1

6

Feb 1

7

$ k/Day Capesize 4TC

Panamax 4TC

Supramax 5TC

Handysize 6TC

Earnings

disconnected

Source(s): Baltic Exchange

1. QUICK RECAP

Commencement of Chinese Rapid Development

Chinese Credit Crunch

Cooling Chinese Steel Demand & Reducing Congestion

Record Chinese Iron Ore imports

Global Financial Crisis

3

2. THE MARKET IN 2016

What just happened?

4

DRY BULK FREIGHT RATES IN 2015-16

0

2

4

6

8

10

12

14

16

Jan 1

5

Mar

15

May 1

5

Jul 15

Sep 1

5

Nov 1

5

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

Mar

17

$ k/Day

Capesize 4TC

Panamax 4TC

Supramax 5TC

Handysize 6TC

Source(s): Baltic Exchange


6

CONSTRUCTION IN CHINA FIRMED UP…

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Feb 1

5

Apr

15

Jun 1

5

Aug 1

5

Oct

15

Dec 1

5

Feb 1

6

Apr

16

Jun 1

6

Aug 1

6

Oct

16

Dec 1

6

Feb 1

7

YoY Chg Buildings Under Construction

Buildings Completed

Buildings Started

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

20

40

60

80

100

120

140

160

180

200

Jan 1

5

Mar

15

May 1

5

Jul 15

Sep 1

5

Nov 1

5

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

YoY Chg Hours

Monthly Average hours % Change

Source(s): National Bureau of Statistics of China, Komatsu 6

BUILDING ACTIVITY CONSTRUCTION EQUIPMENT ACTIVITY


…INCREASING DEMAND FOR STEEL

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Jan 1

5

Mar

15

May 1

5

Jul 15

Sep 1

5

Nov 1

5

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

k tonnes

Crude Steel Production Change YoY

Source(s): CAAM, Worldsteel 7

VEHICLE PRODUCTION CHINA CRUDE STEEL PRODUCTION


0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan 1

5

Mar

15

May 1

5

Jul 15

Sep 1

5

Nov 1

5

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

k Vehicles

Passenger Cars Commercial Vehicles

WARM SUMMER ADDED TO COAL DEMAND AND PRICES SOARED

Source(s): The Steel Index, Intercontinental Exchange, Weatherbase, Tutiempo 8

TEMPERATURE IN THREE REGIONS OF CHINA COAL PRICES IN CHINA


-10

-5

0

5

10

15

20

25

30

35

Jan 1

6

Feb 1

6

Mar

16

Apr

16

May 1

6

Jun 1

6

Jul 16

Aug 1

6

Sep 1

6

Oct

16

Nov 1

6

Dec 1

6

◦c

Guangzhou

Guangzhou Hist Avg

Shanghai

Shanghai Hist Avg

Beijing

Beijing Hist Avg0

30

60

90

120

150

180

0

60

120

180

240

300

360

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

USD/Tonne

TSI CFR China Premium JM25 Coking Coal

ICE API8 5,500 kc NAR, CFR South China

3. DEMAND OUTLOOK

Overall – Contained Enthusiasm

9

LONG GONE ARE THE BOOM YEARS

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Iron Ore Coal Grains Steel Other Dry

CAGR % 2000 to 2016 Global average

10

DEMAND GROWTH BY MAIN COMMODITIES 2000-16 DEMAND GROWTH BY MAIN COMMODITIES 2016-21

3. DEMAND OUTLOOK

Source(s): Maersk Broker

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Iron Ore Coal Grains Steel Other Dry

CAGR % 2016 to 2021 Global average

SMALLER COMMODITIES WILL GROW FASTER THAN THE LARGER ONES

11

DEMAND GROWTH FOR IRON ORE AND COAL DEMAND GROWTH FOR OTHER DRY COMMODITIES

3. DEMAND OUTLOOK

Source(s): Maersk Broker

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Bill. tonnes

Iron Ore Coal

0.0

0.5

1.0

1.5

2.0

2.5

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Bill. tonnes

Steel Agricultural Other Dry

6.2%

1.4%

3.5%

2.4%

MARKET STRUCTURE

Source(s): Maersk Broker, Trademap 2013 12

COMMODITY MARKET SHARE FOR PANAMAX AND ABOVE SUB-PANAMAX COMMODITY MARKET SHARE

Steel & Ferrous

Products of all

sorts 29%

Agricultural

Commodities

20% Forest products

14%

Fertilizers

10%

Steam Coal

8%

Minor Ores

5%

Cement

5%

Met Coal

3%

Minerals Quarry Products Petcoke

Iron Ore

48%

Steam Coal

30%

Met Coal

11%

Agricultural

Comms

8%

Alumina/Bauxite

1%

Steel & Scrap

1%

Cement

1%

3. DEMAND OUTLOOK

3. DEMAND OUTLOOK

Steel - Chinese Bubbles, Big Belts & Trump Cards

13

TIGHT BALANCING ACT FOR CENTRAL GOVERNMENT

Source(s): Maersk Broker, Reuters, National Bureau of Statistics of China 14

CHINA’S OUTSTANDING DEBT TO GDP CHINA PROPERTY INVESTMENT AND HOUSE PRICE

3. DEMAND OUTLOOK

-10

-5

0

5

10

15

20

25

30

35

40

Mar

11

Jul 11

Nov 1

1

Mar

12

Jul 12

Nov 1

2

Mar

13

Jul 13

Nov 1

3

Mar

14

Jul 14

Nov 1

4

Mar

15

Jul 15

Nov 1

5

Mar

16

Jul 16

Nov 1

6

% Chg YoY

House Prices

Fixed Asset Investment in Property

Reckless borrowing slowing growth and deflation impact

tighten monetary conditions & cut

credit flow

stimulus policy (low interest rates &

supply side policies to improve

corporate efficiency)

Reason for growing Debt/GDP ratio?

The remedy?

URBANIZATION AND INDUSTRIALIZATION

Source(s): Maersk Broker, WorldSteel, IMF, Worldbank 15

URBAN POPULATION RATIO IN 2015 INDUSTRIAL DEVELOPMENT AND STEEL CONSUMPTION

3. DEMAND OUTLOOK

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0 20,000 40,000 60,000

Ste

el Consum

ption (

Tonne/C

apita)

GDP per Capita

India

China

South Korea

Japan

USA

0

10

20

30

40

50

60

70

80

90

100

World Avg. Urbanization

ONE BELT, ONE ROAD

Source(s): Wall Street Journal 16

3. DEMAND OUTLOOK

Investment in under-developed areas would

spur economic growth and local demand for

(Chinese?) steel.

It boasts a budget of about $100 Bn (equivalent

to the Marshall plan in today’s money) to invest

in rail, highways, ports and power generating

infrastructures.

Most major economies (except the US and

Japan) have joined the Asian Infrastructure

Investment Bank (AIIB), the financial institution

that will support the infrastructure investments.

9 Projects already approved for $1.7 Bn, 7 more

are being assessed. Most of them have been for

the Benefit of South Asian countries so far.

BUT CHINA REMAINS THE LARGEST DRIVER

Source(s): Maersk Broker, WorldSteel 17

STEEL INTENSITY IN CHINA

CHINESE STEEL

3. DEMAND OUTLOOK

0

0.1

0.2

0.3

0.4

0.5

0.6

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

T/Capita

History

Forecast

0

100

200

300

400

500

600

700

800

900

1000

0

100

200

300

400

500

600

700

800

900

1,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mill. Tonnes

Production Consumption

TRUMP CARD?

18

3. DEMAND OUTLOOK

Pro-growth policies

Should make local steel demand and production surge

Infrastructure renewal Barriers on steel imports

Growth spurs steel demand

Extra annual $1.1 Trillion investment required

US imports about 40 Mill. tonnes of steel per annum

The USA produced 79 mill. tonnes of steel in 2016

BUT

• Supportive policies still need to be laid-out • Hard to find $1,1 Trillion when debt is around $20 Trillion • Only 4/5 mill. tonnes of steel came from Mexico & China • Two thirds of US crude steel production comes from EAF

TRUMP CAT WILL NOT BOUNCE VERY HIGH

-

20

40

60

80

100

120

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Mill. Tonnes

Electric Arc Furnaces Blast Furnaces

0

10

20

30

40

50

60

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Mill. Tonnes CanadaBrazilSouth Korea/Japan/TaiwanEurope/Turkey/RussiaMexicoChinaOthers

Source(s): WorldSteel, Trademap 19

USA STEEL PRODUCTION BY PROCESS USA STEEL IMPORTS BY ORIGIN

3. DEMAND OUTLOOK

IT WOULD BRING IMBALANCE IN STEEL AND SCRAP TRADES

Source(s): Maersk Broker, Trademap 20

PRE TRUMP WITH TRUMP POLICY PROPOSALS

3. DEMAND OUTLOOK

Steel Imports

Scrap Exports

RISE OF TRADE BARRIERS IS A RISK

Source(s): WTO, Trademap 21

OFFICIAL WTO COMPLAINTS AGAINST CHINA

CHINESE STEEL EXPORTS

3. DEMAND OUTLOOK

0

10

20

30

40

50

60

70Mill. Tonnes

Far East

Europe/Med

North America

Latin America

South Asia

Other

STEEL PRODUCTION IS TAKING A STEP BACK BEFORE SURGING AGAIN

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mill. Tonnes

Asia Europe

North America India

Middle East Other

Source(s): Maersk Broker, WorldSteel, Trademap 22

STEEL PRODUCTION FORECAST STEEL IMPORT FORECAST

3. DEMAND OUTLOOK

-

50

100

150

200

250

300

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Mill. Tonnes

China Other Asia

Middle East North America

S Korea Europe

Other

3. DEMAND OUTLOOK

Other commodities

23

NEW CAPACITY FROM HYDRO AND NUCLEAR HAS DAMPENS COAL DEMAND

Source(s): Maersk Broker, Intercontinental Exchange, NDRC, NEA 24

POWER GENERATION 5-YR PLAN

HYDROELECTRIC AND NUCLEAR CAPACITY INSTALLATION

3. DEMAND OUTLOOK

0

200

400

600

800

1,000

1,200

2015 2020

Gw Coal Renewables Gas

0

2

4

6

8

10

12

14

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gw

From Nuclear Plants (at 86% of capacity)

From Hydroelectric Dams (at 40% of capacity)

MOST OF INDIAN COAL DEMAND IS FOR POWER GENERATION

Source(s): Maersk Broker, India Coal Electricity Authority, Thomson Reuters 25

RAW COAL USAGE POWER GENERATION 5-YR PLAN (IN GW)

3. DEMAND OUTLOOK

0

50

100

150

200

250

300

2017 2022

Coal Renewables Gas Nuclear

[CATEGORY NAME]

[PERCENTAGE]

Steel & Sponge Iron

10%

Cement 5%

Others 21%

WOOD PELLET IMPORTERS AND EXPORTERS - CHANGES 2012-2016 (MILL. TONNES)

Source: Maersk Broker, Trademap

Korea & Japan -7.6 -6.5

-5.7 -5.0 -3.4

Europe

4.7 4.6 4.1 2.9 1.9

United States

2.4 1.4 1.6 1.6 1.6

2012 2013 2014 2015 2016

Canada

-0.2

2015

-1.7 -1.9

2013

-0.6

2014 2016 2012

-2.1

1.1 0.7 0.1 1.3

0.0

Vietnam

0.9 1.1 0.9 0.7 0.7

Russia

Vietnam

2012 2013 2014 2015 2016

Exports

Imports

2012 2013 2014 2015 2016

2012 2013 2014 2015 2016

2012 2013 2014 2015 2016

SOYBEANS AND CORN DEMAND TO GROW HEALTHILY

27

MEAT CONSUMPTION DRIVES SOY & CORN DEMAND REGIONAL DIFFERENCES IN MEAT CONSUMPTION GROWTH

3. DEMAND OUTLOOK

0.0%

2.5%

5.0%

7.5%

10.0%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

% Chg

World Meat consumption

Corn and soybean consumption

0

50

100

150

200

250

300

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

mill. tonnes

OECD Asia

Source(s): USDA, OECD-FAO, World Bank

WHILE RICE AND WHEAT DEMAND SHOULD BE STEADY

Source(s): Trademap, OECD-FAO 28

POPULATION GROWTH DRIVES WHEAT DEMAND SEASONALITY

3. DEMAND OUTLOOK

0

20

40

60

80

100

120

140

160

180

200

0

200

400

600

800

1000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

mill. tonnes Kg/Capita

World Wheat Consumption (LHS)

Human Wheat Consumption Per Capita (RHS)

0

5

10

15

20

25

30

35

Aug 0

8

Feb 0

9

Aug 0

9

Feb 1

0

Aug 1

0

Feb 1

1

Aug 1

1

Feb 1

2

Aug 1

2

Feb 1

3

Aug 1

3

Feb 1

4

Aug 1

4

Feb 1

5

Aug 1

5

Feb 1

6

mill. tonnes

Northern Hemisphere Southern Hemisphere

PRESSURE TO INCREASE PRODUCTIVITY

29

GLOBAL POPULATION AND ARABLE LAND PER CAPITA WORLD RENEWABLE WATER PROFILE

3. DEMAND OUTLOOK

Source(s): OECD-FAO, UN, PotashCorp

20

21

22

23

24

25

26

27

28

29

30

0

1

2

3

4

5

6

7

8

9

10

1990 2000 2010 2020 2030H

ecta

res/C

apita

Billion P

eople

World Population (LHS)Arable Land (RHS)

WORLD FERTILIZER CONSUMPTION BY REGION AND CROP

Source(s): IFA, OECD-FAO, Fertecon, PotashCorp 30

FERTILIZER CONSUMPTION BY REGION (% SHARE) FERTILIZER CONSUMPTION BY CROP (% SHARE)

3. DEMAND OUTLOOK

0

10

20

30

40

50

60

70

80

90

100

Nitrogen Phosphate Potash

China India Other Asia

Latin America North America

0

10

20

30

40

50

60

70

80

90

100

Nitrogen Phosphate Potash

Grains Oilseeds Fruits & Vegetables

4. SUPPLY

Demolition Revelation

31

BULK SUPPLY FORECAST – TOTAL FLEET

15.7%

13.7%

10.8%

5.7% 4.5%

2.4% 2.6% 1.1%

-0.1% 1.0%

2.3% 3.2%

-10%

-5%

0%

5%

10%

15%

20%

-50

-25

0

25

50

75

100

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

DW

T m

ill.

Actual deliveries Expected deliveries from present orderbook

Expected deliveries from forecasted orders Actual scrapping

Forecasted scrapping Net fleet growth (rhs)

4. SUPPLY

Source(s): Maersk Broker, IHS 56

DEMOLITION WILL REMAIN HIGH ALBEIT AT A LOWER LEVEL


SCRAPPING AND AVERAGE SCRAPPING AGE SCRAPPING FORECAST

4. SUPPLY

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35 Age

DW

T m

ill.

10,000-39,999 DWT 40,000-66,999 DWT 67,000-99,000 DWT

100,000- DWT Average age (rhs)

9.5

6.7

4.7

0.9 1.1

3.0

0.9

4.3

13.2

7.2

25.8

34.5

22.5

16.0

31.1 29.6

26.3

12.5 11.5

12.1 12.5

0%

1%

2%

3%

4%

5%

6%

7%

0

5

10

15

20

25

30

35

DW

T m

ill.

Actual scrapping Forecasted scrapping

Scrapping vs. fleet BOY (rhs)

PLENTY SMALLER SCRAP CANDIDATES WHILE ORDERBOOK HAS SHRUNK


CURRENT FLEET BY SIZE AND AGE SEGMENT ORDERBOOK VS FLEET

4. SUPPLY

0%

10%

20%

30%

40%

0

100

200

300

400

10,000-39,999

DWT

40,000-66,999

DWT

67,000-99,999

DWT

100,000- DWT

DW

T m

ill.

0-5 years 6-10 years 11-15 years

16-20 years >21 years >16 years % (rhs)

>21 years % (rhs)

0

100

200

300

400

500

600

700

800

600

620

640

660

680

700

720

740

760

780

800

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Mar-17

DW

T m

ill.

Fleet Orderbook

ORDERBOOK


ORDERBOOK AT CHINESE YARDS ORDERBOOK AT JAPANESE YARDS

4. SUPPLY

75%

68%

57%

0% 0%

35%

100%

40%

15%

100%

52%

14% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

40

50

60

70

80

90

100

VLO

C

Ne

wca

stle

max

Stan

dar

d C

apes

ize

Bab

y-C

ape

Po

st-P

anam

ax

Kam

sarm

ax

Pan

amax

Ult

ram

ax

Sup

ram

ax

Han

dym

ax

Larg

e H

and

y

Reg

ula

r H

and

y

Smal

l Han

dy

% of global orderbook Number

Number of vessels (LHS)

Percentage within vessel class (RHS)

8%

30% 32%

0%

100%

51%

0%

51%

65%

0%

39%

86%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

40

50

60

70

80

90

100

VLO

C

Ne

wca

stle

max

Stan

dar

d C

apes

ize

Bab

y-C

ape

Po

st-P

anam

ax

Kam

sarm

ax

Pan

amax

Ult

ram

ax

Sup

ram

ax

Han

dym

ax

Larg

e H

and

y

Reg

ula

r H

and

y

Smal

l Han

dy

% of global orderbook Number

Number of vessels (LHS)

Percentage within vessel class (RHS)

CONTRACTING HAS ALMOST COME TO A HALT WHILE ORDERBOOK HAS SHRUNK


DELIVERIES AND ORDERS PER YEAR FLEET DEVELOPMENT BY SIZE SEGMENT

4. SUPPLY

79.8

98.9 100.4

60.9

47.9 48.9 49.7

34.8

11.5

19.6

30.2

38.5

0%

8%

16%

24%

0

40

80

120

DW

T m

ill.

Expected deliveries from forecasted contracting

Expected deliveries from current orderbook

Orders

Deliveries vs. fleet BOY (rhs)

787.3

842.0

-[VALUE] 1.5

-[VALUE]

17.4 5.3

11.4 3.9

27.7 17.0

4.8 0.2 10.6

15.6

700

750

800

850

DW

T m

ill.

Fleet Loss 2021 vs. Curr. Fleet Gain 2021 vs. Curr. Fleet

BULK SUPPLY FORECAST – SUPRAMAX (40,000-67,000 DWT)

20.2% 18.4%

13.0%

7.2% 5.5%

7.6% 5.7%

3.7%

-0.4% 0.9%

3.6% 4.9%

-10%

0%

10%

20%

30%

-10

0

10

20

30

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

DW

T m

ill.




4. SUPPLY


BULK SUPPLY FORECAST – HANDYSIZE (10,000-40,000 DWT)

7.9%

5.2%

3.0%

-0.3%

1.8% 1.6% 2.1%

0.8%

-1.0%

1.1%

3.5% 4.0%

-10%

-5%

0%

5%

10%

15%

-10

-5

0

5

10

15

2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

DW

T m

ill.




4. SUPPLY


5. MARKET BALANCE

Still Weighed Heavily on Supply

Thursday, April 13, 2017 39

DEMAND WILL OUTPACE SUPPLY FOR NEXT FEW YEARS

0

1,500

3,000

4,500

6,000

7,500

50

100

150

200

250

300

Index

Supply Demand BDI (rhs)

Source(s): Maersk Broker, IHS, Baltic Exchange 40

SUPPLY/DEMAND DEVELOPMENT SUPPLY AND DEMAND GROWTH

5. MARKET BALANCE

0%

4%

8%

12%

16%

20%

Annual supply growth Annual demand growth

THERE REMAIN A HIDDEN LAYER OF SUPPLY FROM IDLE SHIPS…

50%

60%

70%

80%

90%

100%

Active Idle

Source(s): Maersk Broker, IHS, AXS, Reuters 41

IDLE FLEET DEVELOPMENT IDLE FLEET (3 MONTHS) – MARCH 2017

5. MARKET BALANCE

0

25

50

75

100

125

Jan 1

6

Mar

16

May 1

6

Jul 16

Sep 1

6

Nov 1

6

Jan 1

7

Mar

17

Num

ber

of

vessels

Handysize Supramax Panamax Capesize

…AND SLOW STEAMING

Source(s): Maersk Broker, AXS, Baltic Exchange, OceanConnect 42

SUPRAMAX SPEED AND EARNINGS SUPRAMAX SPEED AND BUNKER COSTS

5. MARKET BALANCE

0

150

300

450

600

750

9.5

10.0

10.5

11.0

11.5

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

$/Tonne Knots

Ballast Speed

Laden Speed

IFO Singapore (RHS)2.0

7.0

12.0

17.0

22.0

9.5

10.0

10.5

11.0

11.5

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

$ k/Day Knots

Ballast Speed

Laden Speed

Baltic Exchange 4TC (RHS)

…AND SLOW STEAMING

Source(s): Maersk Broker, AXS, Baltic Exchange, OceanConnect 43

HANDYSIZE SPEED AND EARNINGS HANDYSIZE SPEED AND BUNKER COSTS

5. MARKET BALANCE

50

250

450

650

9.0

9.5

10.0

10.5

11.0

11.5

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

$/Tonne Knots

Laden Speed

Ballast Speed

IFO Singapore (RHS)3.0

5.0

7.0

9.0

11.0

9.0

9.5

10.0

10.5

11.0

11.5

1Q

13

2Q

13

3Q

13

4Q

13

1Q

14

2Q

14

3Q

14

4Q

14

1Q

15

2Q

15

3Q

15

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

$ k/Day Knots

Laden Speed

Ballast Speed

Baltic Exchange Handysize 6TC (RHS)

FREIGHT RATE OUTLOOK

Source(s): Maersk Broker, Baltic Exchange (BFA as per March 21st) 44

HANDYSIZE FREIGHT RATES SUPRAMAX FREIGHT RATES

5. MARKET BALANCE

0

2

4

6

8

10

12

Jan 1

4

Jan 1

5

Jan 1

6

Jan 1

7

Jan 1

8

Jan 1

9

Jan 2

0

US$ 1

,000/d

ay

Handysize

BFA Handysize

MB Handysize

0

2

4

6

8

10

12

14

Jan 1

4

Jan 1

5

Jan 1

6

Jan 1

7

Jan 1

8

Jan 1

9

Jan 2

0

US$ 1

,000/d

ay

Supramax

BFA Supramax

MB Supramax

CONCLUSIONS

Demand will outpace supply for the next three years.

…but oversupply is still consequent.

We will have to wait until 2019/20 for dry bulk freight

rates to be negotiated near the 2014 levels.

Sub-Panamax assets will benefit more due to an older

fleet and better growth outlook for smaller commodities.

45

This report is based on our knowledge of relevant market conditions. Our estimates are made on the basis of this knowledge, but other circumstances, or new circumstances, as well as general uncertainty could cause the market to develop differently. We take general reservation for misprints. © All rights reserved.

No part of this publication may be reproduced in any material form (including photocopying or storing it in any medium by electronic means) without the written permission of the copyright owner. Likewise, any quoting is prohibited without the written permission of the copyright owner.

dry bulk sub-panamax outlook

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