methanol shipping · of ships carrying dangerous chemicals in bulk - ibc code provides detailed...
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METHANOL SHIPPING:
19TH IMPCA
ASIAN METHANOL
CONFERENCE
2 – 3 NOVEMBER, 2016
SINGAPORE
QUINCANNON ASIA PTE LTDKARAN GROVER
SAILING TOWARDS
NEW HORIZONS
AGENDA
METHANOL TRADE DYNAMICS IN BRIEFMETHANOL DEMAND & TRADE FLOWS
METHANOL SHIPPING SHIPPING REQUIREMENTS
THE IMO 2/3 FLEET AT A GLANCE
METHANOL FLEET & CHANGING TRADE FLOWS
VESSEL ECONOMICS – 45K DWT TANKER
SHIPPING MARKETSCURRENT SHIPPING MARKETS
FREIGHT RATES TO MID CHINA
SHIPPING UPDATES & OUTLOOK
SUMMARY
QUINCANNON INTRODUCTION
Q&A
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METHANOL ACCOUNTS FOR ~25% OF
PETROCHEMICAL TRADE
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GLOBAL METHANOL DEMAND
BY DERIVATIVE
BY REGION• CURRENT DEMAND ~80 MIL TONS (2016E)
• EXPECTED TO REACH ~100 MIL TONS BY 2020
• APPROX. 33% OF DEMAND IS FOR THE ENERGY
SECTOR
• 72% OF DEMAND IS IN ASIA
• ~59% OF DEMAND IS IN CHINA &
GROWING!
• CHINA’S GROWTH DRIVEN LARGELY
BY MTO EXPANSIONS
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SOURCE: MMSA
METHANOL TRADE FLOWS
• NEGLIGIBLE US EXPORTS IN 2015 (US WAS NET IMPORTER)
• NEW METHANOL CAPACITY ADDED IN THE US IN 4Q 2015 / 1Q 2016
• BY MID-2016 THE US EXPORTED ABOUT 240,000 MT METHANOL TO CHINA – NET EXPORTER
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SOURCE: MMSA
METHANOL IS SHIPPED ON
SPECIALIZED IMO TANKERS
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SHIPPING REQUIREMENTS
METHANOL IS CLASSIFIED AS MARPOL ANNEX II PRODUCT & REQUIRES
SPECIALIZED TANKERS WITH FOLLOWING ATTRIBUTES:
IMO CLASSIFICATION: IBC CODE SHIP TYPE III OR UP
STRIPPING CAPACITY: (MARPOL CATEGORY “Y”):
• ACCEPTABLE RESIDUE PER TANK (75 LTRS – 150 LTRS PER TANK)
COMPATIBLE TANK COATING:
• STAINLESS STEEL / MARINE LINE / ZINC / INTERLINE 9001
• EPOXY COATED TANKS ARE NOT IDEAL TO CARRY METHANOL
INERTING / PURGING ABILITY:
• FOR TANKS OVER 3000 CBM
• NEW IGS REQUIREMENTS FOR IMO 2 SHIPS (8K – 20K DWT) CONSTRUCTED
AFTER 1 JANUARY 2016
MARPOL ANNEX IINOXIOUS LIQUID SUBSTANCES CARRIED IN
BULK (MARINE POLLUTION)
IMO SHIP TYPE 3PRODUCTS WITH SUFFICIENTLY SEVERE
ENVIRONMENTAL AND SAFETY HAZARDS
WHICH REQUIRE A MODERATE DEGREE OF
CONTAINMENT TO INCREASE SURVIVAL
CAPABILITY IN A DAMAGED CONDITION
IMO POLLUTION CATEGORY YNOXIOUS LIQUID SUBSTANCES WHICH, IF
DISCHARGED INTO THE SEA FROM TANK
CLEANING OR DEBALLASTING OPERATIONS,
ARE DEEMED TO PRESENT A HAZARD TO
EITHER MARINE RESOURCES OR HUMAN
HEALTH OR CAUSE HARM TO AMENITIES OR
OTHER LEGITIMATE USES OF THE SEA AND
THEREFORE JUSTIFY A LIMITATION ON THE
QUALITY AND QUANTITY OF THE DISCHARGE
INTO THE MARINE ENVIRONMENT
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MARPOL ANNEX II & METHANOLPOLLUTION CATEGORIZATION:
AS OF JAN 2007 – RECLASSIFIED FROM IBC CHAPTER 18 TO IMO 3 TYPE
WHAT IS AN IMO SHIP TYPE?
• THE INTERNATIONAL CODE FOR THE CONSTRUCTION AND EQUIPMENT
OF SHIPS CARRYING DANGEROUS CHEMICALS IN BULK - IBC CODE
PROVIDES DETAILED STANDARDS FOR THE CONSTRUCTION AND
EQUIPMENT OF THREE TYPES OF CHEMICAL TANKERS (TYPES 1, 2 AND 3)
• THE BULK CARRIAGE OF ANY LIQUID PRODUCT OTHER THAN THOSE
DEFINED AS OIL (SUBJECT TO MARPOL ANNEX I) IS PROHIBITED UNLESS
THE PRODUCT HAS BEEN EVALUATED AND CATEGORISED FOR
INCLUSION IN CHAPTER 17 OR 18 OF THE IBC CODE
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CARGO TANK LOCATION AND CONFIGURATION
MARPOL ANNEX II SHIPS:
IMO SHIP TYPE 1
IS A CHEMICAL TANKER INTENDED FOR THE
TRANSPORTATION OF PRODUCTS CONSIDERED TO
PRESENT THE GREATEST OVERALL HAZARD. THE QUANTITY
OF CARGO REQUIRED TO BE CARRIED IN A TYPE 1 SHIP
SHOULD NOT EXCEED 1,250 M3 IN ANY ONE TANK
IMO SHIP TYPE 2
IS INTENDED TO TRANSPORT PRODUCTS WITH
APPRECIABLY SEVERE ENVIRONMENTAL AND SAFETY
HAZARDS WHICH REQUIRE SIGNIFICANT PREVENTIVE
MEASURES TO PRECLUDE ESCAPE OF SUCH CARGO. THE
QUANTITY OF CARGO REQUIRED TO BE CARRIED IN A TYPE
2 SHIP SHOULD NOT EXCEED 3000 M3 IN ANY ONE TANK
IMO SHIP TYPE 3
IS A CHEMICAL TANKER INTENDED TO TRANSPORT
PRODUCTS WITH SUFFICIENTLY SEVERE ENVIRONMENTAL
AND SAFETY HAZARDS. THESE PRODUCTS REQUIRE A
MODERATE DEGREE OF CONTAINMENT TO INCREASE
SURVIVAL CAPABILITY IN A DAMAGED CONDITION. THERE IS
NO FILLING RESTRICTION FOR CHEMICALS ASSIGNED TO
SHIP TYPE 3
CRUDE OIL TANKERCHEMICAL TANKER
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CHEMICAL vs. PRODUCT / CRUDE TANKER
CHEMICAL TANKERS ARE AMONGST THE MOST COMPLEX AND SOPHISTICATED SHIPS
THE IMO 2/3 FLEET AT A GLANCE
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4,244 SHIPS CLASSIFIED AS IMO 2/3 TANKERS100.6 MIL DWT / 111.5 MIL CBM / 10 YRS AVG AGE
1,851 SHIPS / 63.1 MIL DWT 69.8 MIL CBM TRADING NON-IMO PRODUCTS
2,393 SHIPS TRADING IMO 2/3 PRODUCTS 37.5 MIL DWT / 41.6 MIL CBM / 10.5 YRS AVG AGE
180 “METHANOL” TANKERS BETWEEN 37K & 50K DWT8.4 MIL CBM SPACE: 70 ZINC (3.75 MIL CBM) + 31 INTERLINE (1.37 MIL CBM) + 15
MARINELINE (732K CBM) + 64 STAINLESS STEEL (2.55 MIL CBM)
YOUNG FLEET – 8.5 YRS AVG AGE
32 SHIPS OLDER THAN 15 YRS AND 8 SHIPS OLDER THAN 20 YRS
42 SHIPS FOR CAPTIVE METHANOL TRADE
209 NEW BUILDS / 4.8 MIL DWT / 5.3 MIL CBM IN THE PIPELINE
(SEPT 2016 – 2019) 75 SHIPS ALREADY DELIVERED BETWEEN JAN-AUG 2016
181 SHIPS SUITABLE FOR METHANOL
1640 SHIPS SUITABLE FOR METHANOL 26.7 MIL
DWT / 29.6 MIL CBM / 11.5 YRS AVG AGE
STAINLESS STEEL SPACE ACCOUNTS FOR 78% OF
ALL NEW BUILDS (BY CBM)
29 SHIPS (37-50K DWT) / 1.3 MIL CBM OF NEW BUILDS BY 2019
4 ZINC (228K CBM) + 4 INTER LINE (214K CBM) + 21 STAINLESS
STEEL (895K CBM) SUITABLE FOR METHANOL
IMO 2/3 NEW BUILDS DELIVERY
TYPICAL METHANOL CARRIER & ECONOMICS
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SIZE RANGE: 13,000 DWT UP TO ~50,000 DWT AVERAGE SIZE HAS INCREASED OVER THE YEARS
AVERAGE SPEED: 14 KNOTSUSUAL TRANSIT TIMES:
• 19 – 21 DAYS MIDDLE EAST GULF - MID CHINA
• 33 – 36 DAYS US GULF / CARIBS - MID CHINA
• 07 – 09 DAYS SE ASIA - MID CHINA
• 17 – 20 DAYS NEW ZEALAND - MID CHINA
ABILITY TO LOAD MULTIPLE CARGOESMULTIPLE TANKS WITH INDIVIDUAL MANIFOLD, PUMPS & LINES
FOR EACH TANK
DEDICATED SHIPSBALLAST BACK ECONOMICS OR CLEAN/REFINED PETROLUEM
PRODUCTS BACKHAUL CARGOES
30-33 TONNES / DAY BUNKER CONSUPTIONUSD 8,500 PER DAY IN BUNKER COST FOR AN MR
(BSS USD 250 / MT BUNKERS)
CURRENT TIME CHARTER RATES: USD 15,500 –16,500 PDFROM US$ 13,500 – 14,500/ DAY IN 2014
FROM US$ 19,500 – 21,000/ DAY IN 2015
NEWBUILD COST: ~ $ 37.0 MILLION
DAILY FINANCE COST: ~ $ 10,150
(80% FINANCED @ 8% OVER 12 YEARS) FINANCE COSTS ARE RISING RAPIDLY & SHIP FINANCE / PE MONEY HAS
DRIED UP
FINANCIAL COSTS
CREW: $ 3,500
MAINTENANCE: $ 2,000
INSURANCE: $ 700
ADMINISTRATION: $ 800
BREAK EVEN LAY-UP $ 7,500
VESSEL DAILY
OPERATING COSTS
~ $ 17,850 / DAYT/C BREAK EVEN
~ $ 15,500 – 16,500 / DAYCURRENT T/C RATES
~ $ 3.05 MILLION
(11,500 LDT @ $305 ~ 25 YEARS)
RESIDUAL SCRAP
VALUE
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GROWTH OF THE MEOH-SUITABLE MR FLEETC
BM
# O
F S
HIP
S
(NEWBUILDS VS. SCRAPPED SHIPS)
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SHIPPING MARKETSSLOWDOWN IN 2016STRONG MARKET IN 2H 2015
SOURCE: TRADEWINDS SHIPPING NEWSPAPER
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CURRENT SHIPPING MARKETS
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ALL TANKER MARKETS HAVE SLOWED DOWN ACROSS THE BOARD IN 2016• OVERCAPACITY OF TONNAGE IS THE PRIMARY DRIVER FOR THE SLOW DOWN
• REFINED PRODUCTS (CPP) / FUEL ADDITIVES ARE NO LONGER COMPETING W/ CHEMICALS AND METHANOL FOR SPACE
• “SWING TONNAGE” IS NOW MOSTLY EMPLOYED IN THE CHEMICALS MARKET AS THE CPP MARKET IS ALSO HEAVILY OVER
SUIPPLIED WITH 100+ NEW TANKERS SINCE OCT 2015• OTHER SEGMENTS OF THE INDUSTRY ARE COMPETING WITH EACH OTHER & HAVING A PRONOUCNED IMPACT
FREIGHT RATES ARE FALLING DESPITE CLIMBING BUNKER PRICES• TONNAGE OVERSUPPLY & LOWER EARNINGS FOR BOTH SPOT AND COA PLAYERS
• 60-70% OF THE CHEMICAL BUSINESS IS CONTRACTED
WEAKER SENTIMENT & A PROLONGED TOUGH SUMMER• THE BULLISH SENTIMENT AND EARNINGS FROM 2015 HAVE DISAPPEARED
• LOWER TIME CHARTER RATES FOR ALL SIZES AND SECTORS
• CHEAP FINANCE HAS DISAPPEARED FROM SHIPPING
• CONSOLIDATION IN THE CHEMICAL TANKER INDUSTRY IS WELL UNDERWAY – SPECIALLY WITH SMALL OPERATORS
• INCREASED SCRAPPING ACTIVITY IN JULY DRIVEN BY RISING STEEL PRICES
USG TO FAR EAST:• USG TO FAR EAST TRADE LANE HAS COOLED DOWN SIGNIFICANTLY COMPARED TO EARLY 2016 PRIMARILY DUE TO OVER
SUPPLY OF TONNAGE IN THE USG• RATES ARE DOWN 40% COMPARED TO THEIR PEAK IN MARCH / APRIL
MIDDLE EAST TO FAR EAST:• RELATIVELY SLOW / SOFT MARKET THIS YEAR WITH FEWER SPOT VOLUMES AND NO SHORTAGE OF OPEN SHIPS
• SPOT RATES ARE DOWN 25% COMPARED TO 2015 WITH WEAKER CHEMICAL AND CPP MARKETS
• TRAMP OWNERS ARE STRUGGLING TO FIND PROFITABLE EMPLOYMENT
• EASING OF IRANIAN SANCTIONS HAVE HAD NO MAJOR IMPACT
FREIGHT RATES TO MID CHINAVOLATILITY IN USG – FAR EAST MARKET
• MR TYPE CARGO (LARGE CARGO) SIZE
• MANY PLAYERS
• LOW CONTRACT RATION MORE SPOT CARGOES
• SUPPLY CENTER = DEMAND CENTER
• RESULT: HIGHLY VOLATILE MARKET
FR
EIG
HT
RA
TE
, $/M
T
IFO
380
FU
JAIR
AH
, $/M
T
SPOT FREIGHT RATES ARE A FUNCTION OF SUPPLY AND DEMAND
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SHIPPING UPDATES & OUTLOOK
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OVER SUPPLY OF TONNAGE TO CONTINUE TILL ATLEAST 2019• 209 ADDITIONAL SHIPS EXPECTED BETWEEN NOW AND END OF 2019
• SLOWDOWN IN NEW ORDERS
• SUPPLY-DEMAND IMBALANCE TO CONTINUE AND 2017 EXPECTED TO BE SIMILAR TO 2016
• ADEQUATE FLEET TO ACCOMMODATE CHANGE OF TRADING PATTERNS (USG/CARIBS TO FE) AND TON MILE DEMAND
• COA RATES UNDER PRESSURE AND TOUGH CONTRACT RENEWAL PERIOD
• OWNERS KEEN TO SECURE VOLUMES IN CONTRAST TO 2015
PRIVATE EQUITY & CHEAP FINANCE HAS DRIED UP FOR SHIPPING• FINANCE RATES ARE RISING RAPIDLY AS PRIVATE EQUITY / HENDE FUNDS HAVE LOST THEIR APPETITE FOR SHIPPING AND HAVE
STARTED TO OFF-LOAD SHIPPING ASSETS AND FOCUSING MORE ON THE CORE BUSINESS
• CONSOLIDATION IS EXPECTED TO CONTINUE IN A LOW-PROFITABILITY ENVIRONMENT
• INCREASED SNP / TIME CHARTER ACTIVITY & OPPORTUNITIES FOR DISTRESSED ASSESTS
IRANIAN SANCTIONS & VOLUMES• NO PREMIUMS CURRENTLY
• CLARITY POST US ELECTIONS
• PNI & BANKING CHALLENGES EXPECTED TO BE OVERCOME & BUSINESS EXPECTED AS USUAL
REGULATORY CHANGES ON THE HORIZION WILL ASSIST WITH CONSOLIDATION• 8 SEP 2017 - BALLAST WATER MANAGEMENT REQUIREMENTS (USD 500,000 – USD 1 MILLION)
• 1 JAN 2020 – LOW SULPHUR FUEL OIL REQUIREMENTS (USD 3-5 MILLION)• METHANOL / LNG AS AN ALTERNATE TO MARINE FUEL
• INCREASED COSTS EXPECTED TO BE PASSED ON TO CHARTERERS AND FREIGHT RATES TO REFLECT SAME
• INCREASED SCRAPPING ACTIVITY AND LIKELIHOODOF THE FLEET SHRINKING
NEW PANAMA CANAL• NO REAL IMPACT CURRENTLY FOR THE METHANOL BUSINESS
• CHINESE PORT / BERTH RESTRICTIONS DRIVING VESSEL SIZE
THE IMPORTANCE OF SHIPPING TO THE METHANOL BUSINESS CANNOT BE OVEREMPHASIZED
• METHANOL IS ONE OF THE LARGEST TRADED COMMODITES & METHANOL DEMAND IS EXPECTED TO CONTINUE TO GROW
• METHANOL REQUIRES TO BE SHIPPED ON SPECIALIZED TANKERS
• SHIPPING COSTS ACCOUNT FOR A SUBSTANTIAL PERCENTAGE OF THE TOTAL COST COMPARED TO OTHER COMMODITIES
• CURRENT SHIPPING MARKETS ARE VOLATILE & PRESENT OPPORTUNITIES FOR OPTIMIZATION WITH STRATEGIC PLANNING
SUMMARY
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QUINCANNON ASIA PTE LTD: BRIEF INTRODUCTION
NEW YORK
SINGAPORE
SHANGHAIWORLDWIDE COVERAGE INCLUDING
TRANSATLANTIC, TRANSPACIFIC,
INTRA-AMERICAS AND MIDDLE EAST
GULF
COVERING MIDDLE EAST GULF &
INDIA, SOUTH EAST ASIA, FAR
EAST ASIA & TRANSPACIFIC
TRADE LANES
SERVICING CHINA
DOMESTIC AND FAR
EAST MARKETS
• CHEMICALS & SPECIALTY LIQUIDS• METHANOL & DERIVATIVES• VEGOILS & DERIVATIVES• ETHANOL• LUBE-BASE OILS / CPP
INDEPENDENT SHIPBROKERS, ESTABLISHED IN 1974 IN NEW YORK AND SPECIALIZED IN THE BULK MARINETRANSPORT OF THE FOLLOWING:
•PETROCHEMICAL GASES & OLEFINS
• LPG
•TIME CHARTER OF VESSELS
•SECOND-HAND SALES
•RESEARCH, REPORTS & CONSULTING
QUINCANNON OFFICES:
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THANK YOU / Q&A
IF YOU HAVE ANY FURTHER QUESTIONS OR REQUIRE ADDITIONAL INFORMATION OR
ASSISTANCE WITH SECURING TONNAGE PLEASE DO NOT HESITATE TO CONTACT US:
QUINCANNON ASIA PTE LTDPWC BUILDING
8 CROSS STREET #09-06
SINGAPORE 048424
+65-6533 [email protected]
WWW.QUINCANNON.COM
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