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1
METHANOL SHIPPING:
A SNAPSHOT
KARAN GROVER
SHIP BROKER
BRAEMAR QUINCANNON PTE LTD
17TH IMPCA ASIAN METHANOL CONFERENCE 04-06 NOVEMBER, SINGAPORE
2
AGENDA
• BQ Introduction
• Methanol Dynamics in Brief
• Methanol Shipping - Overview• Requirements
• Typical Methanol Carrier
• Tonnage Profile
• Shipping Economics & Freight Rates
• Shipping Markets• New SECA Regulations
• Methanol as a Marine Fuel?
• Summary & Q/A
2
3
BRAEMAR QUINCANNON PTE LTD
• Independent Shipbrokers established in 1998 in Singapore as a Joint Venture between BRAEMAR ACM & QUINCANNON ASSOCIATES w/ a Sister Company BQ Shanghai
• Ship Brokering Business for Bulk Shipments• Methanol and Derivatives / Chemicals / Specialty Liquids
• Petrochemical Gases
• Veg Oils & Derivatives / Ethanol / Lube-Base Oils / CPP
• Special Projects, Research and Consulting
• 22 Staff located in Singapore• 12 Brokers w/ Shipping Background
• 8 Post Fixture & Operations support Staff
• Dedicated Demurrage Analysts
• Dedicated Research Analysts
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4
METHANOL IS AMONGST
THE LARGEST TRADED
CHEMICAL COMMODITIES
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METHANOL DYNAMICS
• Current Demand ~60 M Tons
• ~38% of Demand is for the Energy Sector
• Asia accounts for 68% of the Demand
• ~54% of Demand is in China!
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By Derivative By Region
SOURCE: MMSA AND METHANEX; METHANEX INVESTOR PRESENTATION / AUGUST 2014
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GLOBAL METHANOL DEMAND
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• Steady Uptrend in Demand
• Driven by the Energy Sector
• 45 M Tons in 2009 > 60 M Tons in 2013 > ~80 M Tons in 2017*
SOURCE: MMSA
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METHANOL TRADE FLOWS
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SOURCE: MMSA
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METHANOL TRADE FLOWS
REQUIRE SHIPPING ON
SPECIALIZED TANKERS
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SHIPPING
• Methanol is shipped in Specialized Tankers with following attributes:
• IMO Classification• IBC Code Type III or Up
• Compatible Tank Coating• Stainless Steel / Marine Line / Zinc
• Epoxy Coated Tanks are NOT RECOMMENDED to carry Methanol
• Stripping Capacity (MARPOL Category “Y”)• Acceptable residue per Tank (75 ltrs – 150 ltrs per tank)
• Inerting / Purging Ability• For Tanks over 3000 CBM
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CHEMICAL v PRODUCT / CRUDE TANKER
CHEMICAL TANKER CRUDE OIL TANKER
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A TYPICAL IMO 2/3 TANKER
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TYPICAL METHANOL CARRIER
• Size Range:• 13,000T DWT upto ~ 50,000T DWT
• Average Speed:• 12 – 14 Knots
• 05 – 07 Days Transit from SE Asia to Mid China
• 17 – 20 Days Transit from New Zealand to Mid China
• 19 – 21 Days Transit from Middle East to Mid China
• 33 – 36 Days Transit from US Gulf to Mid China
• Ability to Load & Carry Multiple Cargoes• Multiple Tanks w/ Individual Manifold, Pumps and Lines for Each Tank
• Average Size has Increased Over the Years
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A TYPICAL CHEMICAL TANKER - SCHEMATICS
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GLOBAL IMO 2/3 TONNAGE
• ~ 2550 Ships @ ~38.85Mt DWT / ~43.2M CBM“IMO II / III” Classed Ships carrying Chemicals & Veg Oils on Water Today & Another 250 Expected in the Next 3 Years
• Quality Methanol Tonnage / 26.5 MIL CBM• 6.7 MIL CBM Zinc Space (~314 Ships)• 4.4 MIL CBM Marine Line Space (~337 Ships)• 15.4 MIL CBM Stainless Steel Space (~1075 Ships)
• Young Fleet ~ Average Age of 10.6 Yrs
• Average Age of Scrapping is 27 Yrs• 630 Ships over 15 Yrs Old and 317 Ships over 20 Yrs Old
• There is an Imbalance in Supply & Demand• w/ Excess Tonnage to cope till 2017-2018
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NEW BUILDS & SCRAPPING (2005 – 2017)#
OF
SH
IPS
MT DWT
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~1165 SHIPS ADDED SINCE 2005
SOURCE: BQ IN-HOUSE DATA
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SHIPPING MARKETS
ARE UNDER PRESSURE
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VESSEL ECONOMICS – 45K DWT TANKER
• Financial Cost: • New Build Cost $44 MIL
• Daily Finance Cost $8,500 (80% Financed @ 6% Over 12 Yrs)
• Vessel Daily Operating Costs:• Crew $3,500
• Maintenance $2,000
• Insurance $700
• Administration $800
• Break Even / Lay-Up $7,500
• T/C Break Even $16,000 / Day
• Current T/C Rates $14,000 - $15,000 / Day
• Residual Scrap Value $5.2 MIL (11500 LDT @ USD 450 ~ 25 YRS)
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FREIGHT RATES TO MID CHINA
*METHANOL PRICE DATA PROVIDED BY METHANOL MARKET SERVICES ASIA (MMSA)
FR
EIG
HT
PE
R M
TB
UN
KE
R &
ME
TH
AN
OL
CF
R P
RIC
E P
ET
MT
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CURRENT SHIPPING MARKETS
• Over Capacity of Tonnage Continues
• Shipping Markets are Still Soft
• Slow Year – w/ more of same projected for 2015
• Owners still Struggling
• Earnings & Sentiments Weaker & Compared to 2013
• Increased Costs in the Short Term due to New SECA Regulations
• Iran stable & an Eco-System by Itself
• Slight Premium on Rates, But Ships Available
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METHANOL AS AMARINE FUEL?
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NEW SECA REGULATIONS
• Effective 1 JAN 2015:
0.10% Sulphur Content in Fuels in SECA
• Increased OPEX Costs for Owners
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200 Nautical Miles area US & Candian Coastlines
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METHANOL AS A MARINE FUEL?
• Global Impact by 2020
• Methanol is Cheaper / Easier Alternative than LNG/CPP as a
Bunker (Marine) Fuel
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THE IMPORTANCE OF SHIPPING TO THE METHANOL
BUSINESS CANNOT BEOVER EMPHASIZED.
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SUMMARY
• Methanol is one of the Largest Traded Commodities & Methanol Demand is expected to Continue to Grow
• Methanol Requires to be Shipped on Specialized IMO Tankers
• Current Freight Rates are Low and Shipping Markets are expected to remain Soft in the Short-Medium Term
• Shipping Costs are a Substantial Percentage of the Total Cost, compared to other Commodities
• Methanol is a Potential Complimentary Marine Fuel
• For a World-Scale plant (1.5 Mil Tons) – an Optimization on Freight of just USD 1 represents a USD 30 Mil in Savings over 20 Years!
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Q & A
THANK YOU
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BRAEMAR QUINCANNON PTE LTD
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1 PICKERING STREET #08-01
GREAT EASTERN CENTRE
SINGAPORE 048659
T: +65 9112 3824