Global Shipbuilding Market Overview & Outlook Presentation to 3rd CEXIM International Ship Finance Forum. Stephen Gordon, MD, Clarksons Research
Diaoyutai State Guesthouse, 28th October 2016
Ref: A3633
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The worlds leading integrated shipping services group
July 2016 2 Shipping Market Overview
163 years experience of providing seamless end-to-end shipping services through a global network
Broking Financial Support Research
Listed on the London Stock Exchange (CKN.L)
Member of the FTSE 250
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1. Stressed Market Conditions. Clarksea Index down to $7,000 in 2016 with very weak sentiment possibly some of the toughest years in 2016 and 2017 since financial crisis for shipping. Oversupply continues after heavy ordering in 2010 and 2013. Stress in bulkers, tankers OK but easing back. Pressures in container market building and major stress across offshore driven by oil price collapse. Better markets in some niches (Cruise, Ferrry, Ro Ro).
2. Very Weak Ordering. Shipyard ordering very weak and pressures building for further consolidation and capacity reductions. Weakest ordering since 1980s expected in 2016 continued weakness in 2017 anticipated with focus on small and niche (not offshore). Long term newbuild demand next ten years suggests recovery but timing very uncertain and low investment in short term.
3. Financing Change. Big change in financial landscape. Is limiting short term investment and orders today but still long term financing requirements for $1.2 trillion fleet.
4. Fleet Growth Slowing. But still 50% bigger than after financial crisis so opportunities for service sector. Steady deliveries in 2016 and 2017 and higher demolition. Delivery levels in 2018 and 2019 uncertain and non-delivery continues. Ownership consolidation & more Asian.
5. Shipping at Heart of Trade. World economy now sluggish and risks building. Trade impacted by Chinese economy & oil prices. But still 85% of trade by sea and still long term growth potential.
6. Environment & Technology Change. Regulation accelerating and creating demand for solutions. Technology and innovation opportunities with e-commerce, data, IT and satellite communication to ships to support productivity and regulation.
Market Summary
October 2016 3
www.clarksons.com
Shipping Since the Financial Crisis
0
5
10
15
20
25
30
35
40
45
50
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13Ju
l-13
Jan-
14Ju
l-14
Jan-
15Ju
l-15
Jan-
16Ju
l-16
$000/day
ClarkSea Index 2008-16
Uses Moore Stephens OPEX weighted using ClarkSea assumptions
21st October 2016 $8,904/day
ClarkSea Index ($/day)
Opex Index ($/day)
2008 32,654 6,823
2009 11,330 6,597
2010 15,489 6,789
2011 12,312 6,931
2012 9,576 6,722
2013 10,263 6,672
2014 11,743 6,593
2015 14,410 6,589
2016* 9,140 6,586
2016* = Year-To-Date
October 2016 4
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-80% -60% -40% -20% 0% 20% 40%
ClarkSea Index
VLCCSuezmax
AframaxClean Products (MR)
SS Chem Tanker 20k dwt
CapesizePanamax
HandymaxHandy
Container 6,800 teuContainer 4,500 teu
PCC 6,500 ceuRo-Ro 3,500 lm
LPGLNG
Offshore - JackupsOffshore - Floaters
Offshore - PSV
% deviation from 2009 - 2016 average
ClarkSea Index down 30% in 1H 2016
This chart shows average earnings for each ship type, compared to the average
earnings since January 2009
Tanker markets coming off from 2015, but winter
improvement expected
Containership rates back in the doldrums,
PCC weak, Ro Ro firm
Offshore most challenged sector
Bulkcarrier sector at bottom of cycle but
buying interest
Cycle Position: October 2016
LPG and LNG sectors weak
October 2016 5
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Historical Shipbuilding Shares (GT)
September 2016 6
USA
Japan
Korea
China
Europe
Japan
Korea
China Other Countries
% Global Deliveries
US
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Shipbuilding Deliveries by Country
September 2016 7
8.5
7.2
4.9
0.4
0.4
0.3
0.2
0.2
0.2
0.2
1.1
0 1 2 3 4 5 6 7 8 9
South Korea
China P.R.
Japan
Italy
Philippines
Romania
United States
Germany
Vietnam
Taiwan
Others
Million CGT Output in 2016 YTD
The number of yards refers to yards that have delivered a vessel of 1,000 GT and above in 2016 so far
285 yards are reported to have delivered a vessel of 1,000 GT Or above in 2016 so far. This compares to
2015 when 380 yards output at least one vessel >1,000 GT, including 126 Chinese yards, 18 South
Korean yards and 61 Japanese shipyards
15 yards
99 yards
58 yards
6 yards
2 yards
2 yards
14 yards
6 yards
2 yards
77 yards
4 yards
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Monthly Orders By Number
0
100
200
300
400
500
600
700
800
900
Sep-
96
Mar
-97
Sep-
97
Mar
-98
Sep-
98
Mar
-99
Sep-
99
Mar
-00
Sep-
00
Mar
-01
Sep-
01
Mar
-02
Sep-
02
Mar
-03
Sep-
03
Mar
-04
Sep-
04
Mar
-05
Sep-
05
Mar
-06
Sep-
06
Mar
-07
Sep-
07
Mar
-08
Sep-
08
Mar
-09
Sep-
09
Mar
-10
Sep-
10
Mar
-11
Sep-
11
Mar
-12
Sep-
12
Mar
-13
Sep-
13
Mar
-14
Sep-
14
Mar
-15
Sep-
15
Mar
-16
Sep-
16
No.
Source: Clarksons Research
Reported Shipbuilding Orders Per Month (No)
May 2009: 23 contracts
Feb 1999: 18 orders
October 2016
2016 only 300 orders toQ3 - record low from perfect storm of all major
freight markets being weak, over ordering in 2013 (private equity / eco)
and 2015 (Tier III), financing conditions, yard pricing and very
weak sentiment. Oil price impacting offshore.
8
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Number of Yards Having Booked a New Contract in The Year (>1,000 GT)
0
100
200
300
400
500
600
700
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
ytd
Number of Yards
OtherEuropeSouth KoreaChinaJapan
9
already 20-30% capacity reduction since market peak but
potential for a further 20-30%
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Significant change in financial landscape 1. Significantly less European ship
finance banks. No KG today.
2. Increasing regulation
3. More conservative terms
4. More export credit and leasing (especially China)
5. Private equity investment 2012-2014 but limited today
6. Capital markets window largely closed in 2015 and 2016
7. Market stress and restructuring including for recent loans and offshore
8. Weak financing activity in 2016 to date
Source: Clarksons, Marine Money, Petrofin, Industry Sources
October 2016
0 5 10 15 20 25 30
HSH Nordbank ARStandard Chartered
Commerzbank (ex-DSB)Danish Ship Finance
ING BankDanske Bank
Bremer LandesbankDeutsche Bank
HSBCEksportKreditt
SMBCRBS
CitigroupChina Development Bank
ABN AMROBTMU
NORD/LBBNP ParibasSuMi TRUST
Credit SuisseKEXIM
DVBCredit Agricole CIB
China EximBank of China
ICBC (Including Leasing)KfW IPEX-Bank
NordeaHSH Nordbank (Core)
DnB NOR
Portfolio Size July 2016 ($bn)
10
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World Fleet Growth Slowing
-4%
-2%
0%
2%
4%
6%
8%
10%
0
200
400
600
800
1,000
1,200
1,400
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Fleet, end yearFleet Growth % (RHS)
Million GT y-o-y % change
Fleet growth peaked at c. 9% in 2010
Fleet has grown by 50% since financial
crisis
October 2016
Fleet Forecast for 2016: 3% in GT
1% in numbers
11
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Demolition Trends
1H 2016 was record half year for bulker demolition with 22.5 m dwt
reported scrapped. Record level of containership
demolition this year.
0
2
4
6
8
10
12
14
16
18
Q1
2009
Q2
2009
Q3
2009
