15 Nicola Williams

8/21/2019 15 Nicola Williams

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The VLGC Carrier Market

Riding the next wave ofchange

Nicola WilliamsClarksons Gas DepartmentIHS Asia LPG Seminar, June 12-14 2013www.clarksons.com


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Spot Earnings Volatility & PricingVLGC Rates Freight as % of Landed Costs


3/15

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Newbuilding Price MovementsHistorical VLGC Newbuilding Prices Inflation Adjusted Newbuilding Prices

Data Source: Clarksons


4/15

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Forward VLGC Fleet DevelopmentFleet Sized >60,000 cbm


5/15

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MARPOL Annex VI

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

SulphurContent(%)

SECA/ECA

Global

EU SulphurDirective ~

Revised Annex VIentered into force inJuly 2010 introducingECAs

Entered into forcein May 2005

Additional rules for allships at berth in EUports from Jan 2010

Data source: IMO/EU* 2020 global reduction may be delayed subject to feasibility study~ For inland waterway vessels and ships at berth in European Community ports,

Impact of RegulatoryChanges

Up to 3 different grades of

bunker fuel required in so me

trades

Not considered technically

feasible to reach level of 0.1%

sulphur wi th heavy fuel oil

implies use of gasoil

Price differential

Potential cost s to adapt

engine room

Scrubbers may be used toreduce the SOx emissions

LNG as a fuel


6/15

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Fuel Savings Eco NewbuildingsAssessed Annual Bunker Cost Savings

Fuel efficiency gains in newbuildingsexpected to impact tradingeconomics

Strong financial incentive in anenvironment of high oil/bunkerprices & impending change inRegulations

Developments expected to impactbottom-line $ pmt economics. Couldwe see a two-tier freight marketdeveloping?

Based on a 5 Mt/day Fuel saving



7/15www.clarksons.com

LPG PricingPropane Pricing Butane Pricing



US Export Volume Growth Terminal Exp.

Source: Clarksons

Estimated Export Capacity as of end Year (Maximum Capacity)

+3.5-4.5

+2.3-3



US Gulf VL/LGC Liftings by Destination

2012/13 Liftings

In 2012, approx 12% of the volume found a home East of Suez

Arbitrage Movements



3.95.9

2.1

42.6

Vessel Demand Sensitivities for Load/Disport Alternatives

2.5

2.1

2.8

Load Discharge via Est.Total Days RV (inc in Port, Bunker & Canal Transit Time) 1 M MTPA = VLGC equivalent

US Japan Panama 62 3.9

US Japan via Cape of Good Hope 94 5.9

US N.W.E 34 2.1

US Chile Panama 33 2.1

US Brazil 39 2.5

W.Africa Chile 44 2.8

W.Africa Japan via Cape of Good Hope 64 4.0

AG Japan 41 2.6

Sensitivities of Shipping Demand by Source of Origin/Destination

Panama Expansion Impact on Vessel Demand


11/15

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On Purpose Petchem Production GrowthPlanned Projects by Volume & start-up date

New Propylene Dehydro capacityshould provide a boost to PropaneDemand

Some of this will translate intoadditional import demand in Asia, mostnotably in China

PDH also more appealing in the US asPropane availability rises (due to shale

production) and as prices are morecompetitive. Increased use of Ethaneas a steam cracker feedstock is alsotightening Propylene supply

Source: Clarksons, ICIS & industry announcementsN.B includes projects under study/planned


12/15

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Deficit/Surplus ofVessels (LHS)

Global Seaborne LPG Trade Outlook

Exports by Region Imports by Region


xpor t Sens i t i v i t y toI r an i an Vo l umes


13/15

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Growth East v West Arbitrage PotentialDemand/Supply East Demand/Supply West

Note Based on current regional growth projections

Source: Clarksons


14/15

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Vessel Deficit/Surplus by Year


VLGC Demand/Supply Balance


15/15

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DisclaimerThe material and the information (including, without limitation, any future rates) contained herein (together, the "Information") are provided by H. Clarkson& Co. Ltd ("Clarksons") for general information purposes.

The Information is drawn from Clarksons' database and other sources. Clarksons advises that: (i) any Information extracted from Clarksons' database isderived from estimates or subjective judgments; (ii) any Information extracted from the databases of other maritime data collection agencies may differfrom the Information extracted from Clarksons' database; (iii) whilst Clarksons has taken reasonable care in the compilation of the Information and believesit to be accurate and correct, data compilation is subject to limited audit and validation procedures and may accordingly contain errors; (iv) the provision ofthe Information does not obviate any need to make appropriate further enquiries; (v) the provision of the Information is not an endorsement of anycommercial policies and/or any conclusions by Clarksons and its 'connected persons', and is not intended to recommend any decision by the recipient; (vi)

shipping is a variable and cyclical business and any forecasting concerning it may not be accurate. Any future rates contained herein are only estimates.Clarksons and its connected persons make no representations or warranties of any kind, express or implied about the completeness, accuracy, reliability,suitability or availability with respect to the Information. Any reliance placed on such Information is therefore strictly at the recipient's own risk.

This Information is confidential and is solely for the internal use of the recipient. Neither the whole nor any part of the Information may be disclosed to, orused or relied upon by, any other person or used for any other purpose without the prior written consent of Clarksons. Especially, the information is not tobe used in any document for the purposes of raising finance whether by way of debt or equity. All intellectual property rights are fully reserved.

To the extent permitted by law, Clarksons and its connected persons shall not be liable to the recipient or any third party for any loss or damage of any kindarising out of or in connection with the Information, including without limitation any direct, special, indirect or consequential damages (eg damage for loss ofbusiness or loss of profits) whether caused by tort (including negligence), breach of contract or otherwise, even if foreseeable. These exclusions do not applyto (i) death or personal injury caused by the negligence of Clarksons and its connected persons or (ii) the liability of Clarksons and its connected persons for

fraudulent misrepresentation.In this disclaimer connected persons means, in relation to Clarksons, its ultimate holding company, the shareholders, subsidiaries and subsidiaryundertakings of its ultimate holding company and the respective directors, officers, employees and agents of each of them.

This disclaimer shall be governed by and construed in accordance with English law.

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15 Nicola Williams