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Charlie Huckerby, Bulk Shipping Research Analyst, Braemar Seascope delivered this presentation at the 2013 Regional Ports Conference. The event showcased the latest port developments and assessed the policy, planning and operating strategies designed to maximise the efficiency of Australia's regional ports: gateways for facilitating trade, engagement and regional growth. Featuring local and national case studies, the two day event provided a spotlight on port developments across the country, highlighting the infrastructure, investment and long-term planning necessary to meet Australia’s current and potential competitiveness. For more information on the annual event, please visit the conference website: https://www.informa.com.au/regionalportsconference
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Braemar Seascope
Volatility in the Freight Market
Lloyds List Regional Ports 2013
Charles Huckerby – Braemar Seascope
20th November 2013
Braemar Seascope
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 is specific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Braemar Shipping Services Plc (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 be estimated 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 and external events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such external events have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is an inherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on the information contained in this report. All information provided by Braemar Shipping Services Plc is without any guarantee whatsoever. Braemar Shipping Services Plc or any of its subsidiaries or affiliates 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 without the written permission of Braemar Shipping Services Plc. Braemar Shipping Services Plc accepts no liability to any third parties whatsoever. If permission is granted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.
For more information, please contact Research at [email protected]
Braemar Seascope
Braemar Shipping Services Plc
Shipbroking Dry Cargo Tankers / LNG / FSPO Containers Sale and Purchase New Building Demolition Research
Technical Port construction Naval Architecture Vessel & condition surveys Ship construction supervision
Environmental Pollution control Incident response
Logistics Port Agency Customs clearance Containers
Braemar Seascope
Freight Rate Review
Braemar Seascope
Record Spot Rates An historical perspective
0
50,000
100,000
150,000
200,000
250,000
US
$/
Day
Capesize Panamax Supramax Handysize Handymax
Commencement of
Chinese Rapid
Development
Chinese Credit
Crunch Cooling Chinese
Steel Demand &
Reducing
Congestion
Record Chinese
Iron Ore imports
Source: The Baltic Exchange
Global
Financial
Crisis
17/11/2013
Braemar Seascope
Spot Rates (1 July 2011 – Present)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
US
$/
Day
Cape Panamax Supramax Handysize
Source: The Baltic Exchange
17/11/2013
Braemar Seascope
Capesize Spot Rates (1 July 2011 – Present)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
US
$/
Day
Cape
Source: The Baltic Exchange
17/11/2013
Braemar Seascope
Chinese Iron Ore Re-Stocking… Why now?
Braemar Seascope
Chinese Iron Ore Imports vs. Spot Price Monthly
0
20
40
60
80
100
120
140
160
180
200
20
30
40
50
60
70
80
US$
/ Ton
ne
Mill
ion
To
nn
es
Iron Ore Imports Iron Ore Fines 62% FE spot (CFR Tianjin port)
14/10/2013
Source: Braemar Seascope Research
Braemar Seascope
Chinese Iron Ore Stockpiles
50
60
70
80
90
100
110
Mill
ion
To
nn
es
12/11/2013
Source: Braemar Seascope Research
Braemar Seascope
Australian Iron Ore Exports to China
0
5
10
15
20
25
30
35
40
45
50
Mill
ion
To
nn
es
18/11/2013
Source: Braemar Seascope Research
Braemar Seascope
Panamax Spot Rates (1 July 2011 – Present)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
US
$/
Day
Panamax
Source: The Baltic Exchange
17/11/2013
Braemar Seascope
Panamax Employment 18/11/2013
0
10
20
30
40
50
60
Mill
ion
DW
T p
er Y
ear
Iron Ore Coal Grain Steel
Bauxite /Alum Phos Rock /Fert Coke Scrap
Cement/Clinker Salt Forest Products Other Dry Trades
Source: Braemar Seascope Research
Braemar Seascope
Coal Market: At home and abroad
Braemar Seascope
World Coking Coal Exporters 22/10/2013
0
50
100
150
200
250
300
350
Mill
ion
To
nn
es
Australia United States Canada Mongolia Russia Indonesia Mozambique Poland Czech Republic ROW
Source: Braemar Seascope Research
Braemar Seascope
World Steam Coal Exporters
0
200
400
600
800
1,000
1,200
Mill
ion
To
nn
es
Indonesia Australia Russia South Africa Colombia United States Kazakhstan Canada North Korea ROW
Source: Braemar Seascope Research
17/11/2013
Braemar Seascope
Total Australian Coal Exports 07/11/2013
0
50
100
150
200
250
300
350
400
Mill
ion
To
nn
es
Steam Coking
Source: Braemar Seascope Research
Braemar Seascope
Trade Drives Shipping Demand
Braemar Seascope
Dry Bulk Trade Growth
0
1
1
2
2
3
3
4
4
5
5
Bill
ion
To
nn
es
Iron Ore Coal Agribulk
Bauxite/ Alumina Minor Ores Steel Industry Minor Bulks
Phosrock/ Fertilizers Forest Products Other Minor Bulks
24/07/2013
Source: Braemar Seascope Research
Braemar Seascope
Dry Bulk Trade Growth Iron Ore, Coking & Steam Coal
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Bill
ion
To
nn
es
Iron Ore Coking coal Steam coal
24/07/2013
Source: Braemar Seascope Research
Braemar Seascope
Fleet Review
Braemar Seascope
Braemar Seascope
Bulker Removals – 2013 YTD
59
128
58
3
57
4
37 Vessels
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Small Handy
Large Handy
Handymax
Supramax
Panamax
Post-Panamax
Mini Capesize
Capesize
2013 – To Date, DWT Scrapped (‘000 tonnes)
Total 2013 YTD: 18.9m DWT
2012 Total = 36.5m DWT
Braemar Seascope
What has been ordered so far this year?
21
204
6
272
127
9 2
154
0
50
100
150
200
250
300
SmallHandysize
LargeHandysize
Handymax Supramax Panamax Post-Panamax
MiniCapesize
Capesize
Geared Not Geared
Nu
mb
er o
f V
esse
ls
Braemar Seascope
Capesize (120,000+ DWT)
16 1 9
22 12
26 37 35 38 46
36
11 26 30 30
20 29 41 47
57 55 43
107
196 211
178
85
8
105
81
45
0
25
50
75
100
125
150
175
200
225
Nu
mb
er o
f V
esse
ls
Fleet Orderbook
Braemar Seascope
Panamax (58-84,999 DWT)
57
6 23 25 15 6
28
56 55 43
76 57 62 56
111
51
20
73 82 91
62 68 59
98
162
250
175
32
187
103
38
0
50
100
150
200
250
Nu
mb
er o
f V
esse
ls
Fleet Orderbook
Braemar Seascope
Supramax (50-64,999 DWT)
3 1 1 2 1 2 2 5 3 8 7 6 12
66 68 54 64 95 86 85
109
172
292
334 306
172
18
189 172
60
0
50
100
150
200
250
300
350
400
Nu
mb
er o
f V
esse
ls
Fleet Orderbook
Braemar Seascope
Large Handysize (25-39,999 DWT)
266
4 14 12 9 16 6 15 35 41
56 36 29 30 39 44 39
55 54 34
47 72
122
219 249 259
144
21
185
145
40
0
50
100
150
200
250
300
Nu
mb
er o
f V
esse
ls
Fleet Orderbook
Braemar Seascope
Handysize DWT Distribution - Existing Vessels As of October 2013 08/11/2013
0
50
100
150
200
250
300
350
400
450
500
10-11
.99k d
wt
12-13
.99k d
wt
14-15
.99k d
wt
16-17
.99k d
wt
18-19
.9k d
wt
20-21
.99k d
wt
22-23
.99k d
wt
24k d
wt
25k d
wt
26-27
.99k d
wt
28-29
.99k d
wt
30-31
.99k d
wt
32-33
.99k d
wt
34-35
.99k d
wt
36-37
.99k d
wt
38-39
.99k d
wt
Small Handysize10-24.99k dwt
Large Handysize25-39.99k dwt
Nu
mb
er o
f V
esse
ls
Vessels Currently Trading
Source: Braemar Seascope Research
Braemar Seascope
Handysize DWT Distribution - Newbuildings As of October 2013 08/11/2013
0
20
40
60
80
100
120
10-11
.99k d
wt
12-13
.99k d
wt
14-15
.99k d
wt
16-17
.99k d
wt
18-19
.9k d
wt
20-21
.99k d
wt
22-23
.99k d
wt
24k d
wt
25k d
wt
26-27
.99k d
wt
28-29
.99k d
wt
30-31
.99k d
wt
32-33
.99k d
wt
34-35
.99k d
wt
36-37
.99k d
wt
38-39
.99k d
wt
Small Handysize10-24.99k dwt
Large Handysize25-39.99k dwt
Nu
mb
er o
f V
esse
ls
Vessels on Order
Source: Braemar Seascope Research
Braemar Seascope
Supply and Demand
Braemar Seascope
Cape Supply: Demand
100
150
200
250
300
350
Mill
ion
dw
t/ Y
ear
• Supply: Demand Model suggests fleet utilisation increasing to c.84-87% over the next 3 years, showing an eventual positive outlook
• However as shown the Supply: Demand gap could be closed by Q1 2016 due to various factors including:
– Slow Steaming
– Higher scrapping/ slippage scenario
– Firmer pick up in Dry Bulk trades
Demand
Supply
@ 2kn slow steam
@ 1kn slow steam
Expected case
14/11/2013
Source: Braemar Seascope Research
1 knot slow steaming became institutionalised across the worldwide fleet in 2012
@ full speed
Braemar Seascope
Panamax/Post Supply: Demand
80
100
120
140
160
180
200
Mill
ion
dw
t/ Y
ear
1 knot slow steaming became institutionalized across the worldwide fleet in 2012
• Supply:Demand model scenarios suggests fleet utilisation for the expected case is to increase from c86-89% over the next three years, showing an eventual positive outlook
• However Supply:Demand gap could be reduced due to various factors including:
– Slow steaming
– Higher scrapping/ slippage scenario
– Firmer pick up in dry bulk trades
Demand
Supply @ 1kn slow
steam
@ 2kn slow steam
14/11/2013
Source: Braemar Seascope Research
Expected case
@ full speed
Braemar Seascope
Market Outlook
Braemar Seascope
The Year Ahead...
• Cape Market: We forecast a typically slow start to 2014 with rates under US$10,000, however building to an increase in rates towards the end of the year for the traditional re-stocking period, which could be three or four times more than the market rates during the year.
• Panamax Market: Oversupply continuing to apply pressure to the Panamax market, with flat forecasts for Q1 and Q2, however a modest recovery towards the back end of the year attributed to the US Gulf grain harvest.
• Supramax Market: A flat year expected for the Supramax market, with rates forecast to differ by c.US$2,000-3,000 through the entirety of 2014.
• Handysize Market: The Handysize market will continue to have downward pressure applied to it by the Supramax market, as such a sternly flat market is expected through-out 2014.
15/11/2013
Braemar Seascope
Bulker Delivery Schedule
Jan 2011
