Stopford Cass 20 Oct 2014

8/9/2019 Stopford Cass 20 Oct 2014

1/98

Costas Grammenos Centre Shipping, Trade &

Finance


2/98

CLARKSON RESEARCH SERVICES LTD

1.

Where We Are Now2.

Supply-Demand Balance3.

World Economy & Ship Demand4.

New Ship Investment5.

Regional Shipbuilding Trends6. Focus on China Shipyards7.

Tanker Market Outlook

8.

Dry Bulk Market Outlook9. Future of the Business - update

How shouldshipping beinvesting forthe future?


3/98


I LOVE SHIPPINGI still don’tseem to be

making any

money

Bankers

arrestedmy ships

Lo an

I made

millions ontimecharters

This niceequity fund’s

given me

some moneysir

2


4/98


0

5

10

15

20

25

30

35

40

45

50

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

2 0 0 7

2 0 0 9

2 0 1 1

2 0 1 3

C l a r k s e a I n d e x $ 0 0 0 / d a y

!"#$%&'($ *+,(- './0' 0(12.3(, $4(%$2( ($%+1+2' /5 3$+&(%'6 78#&(%'6 9/+3$1+(%'.1:' ; 2$'?6@AAB,$C

>DE6AAAB,$C

Shipping Earnings 1993-2014 – still sluggish

!"#$"%&'()*

!#,$",-'()*

Earnings are NOT adjusted for inflation

./01 !,&22'()*


5/98


Shipping

SegmentStatusReport Sept 2014

Average earnings

in last 12 months

as a % of averageearnings in last 7

years (Aug 2007 to

Sept 2014) -70% -20% 30% 80%

SuezmaxAframax

Products

CapesizePanamax

Handymax

Chemical Tanker Offshore

Gas

Container

% deviation from 7 year trend

Tankers 25%below trend

Bulkers 52%below trend

Offshore12% over trend

Containers 35% under trend

Chemicals 5% over trend

Gas +93%

4


6/98


010

20

30

4050

60

70

8090

100

J a n -

8 0

J a n -

8 2

J a n -

8 4

J a n -

8 6

J a n -

8 8

J a n -

9 0

J a n -

9 2

J a n -

9 4

J a n

' 9 6

J a n -

9 8

J a n -

0 0

J a n -

0 2

J a n -

0 4

J a n

' 0 6

J a n

' 0 8

J a n

' 1 0

J a n

' 1 2

J

u n e

' 1 3

p r i c e $

m i l l i o n

Aframax Tanker 5 Year OldPanamax bulk carrier 5 year old

Inflated prices2003-8

Ship Market Prices– Quite Firm

Source CRSL

Aframax up,Panamax

down

Dull 1990s

Updated Sept 2014

Distressprices

asset play87-90

decliningmarket

2009-13

6


7/98CLARKSON RESEARCH SERVICES LTD

New Ships Cheaper than “Resales”

•

Chart oppositecompares the price of anew ship with theestimated market price

of a resale on delivery•

On average newbuildingprices are 5% less thanthe cash price for a

“resale”.• High second hand prices

influencing investment

98

66

54

37

55

30 28

104

72

56

37

60

3325

020

40

60

80

100

120New

Resale

New price in RED and resale in BLUE



“Shadow” Surplus & Laid Up Tonnage

010203040506070

8090100110120130140150160

170180190200210220230240250

1 9

5 6

1 9

6 1

1 9

6 6

1 9

7 1

1 9

7 6

1 9

8 1

1 9

8 6

1 9

9 1

1 9

9 6

2 0

0 1

2 0

0 6

2 0

1 1

M d

w t

Tankers laid up Bulkers laid up

Shows “Shadow” surplus tonnage and the proportion laid up

Today layup isvery low. Thereason is that

all the sparecapacity is

soaked up byslow steaming.This creates avery different

dynamic in themarket model

Laid uptonnage was

massive in the1980s, mainlytankers laid upby the owners,

especiallyVLCCs

7a



“Shadow” Surplus & Laid Up Tonnage

010203040506070

8090100110120130140150160

170180190200210220230240250

1 9 5 6

1 9 6 1

1 9 6 6

1 9 7 1

1 9 7 6

1 9 8 1

1 9 8 6

1 9 9 1

1 9 9 6

2 0 0 1

2 0 0 6

2 0 1 1

M d

w t

Shadow surplus Tankers laid up Bulkers laid up

Shows “Shadow” surplus tonnage and the proportion laid up

“Shadow”surplus is

soaked up byslow steamingtoday

“Shadow”Surplus –tonnage in

excess of the

dwt of shipsneeded to

carry trade atfull speed

7a



The VLCC Cost Profile – Heavy Depreciation

0

20

40

60

80

100

120

J a

n -

9 0

J a

n -

9 1

J a

n -

9 2

J a

n -

9 3

J a

n -

9 4

J a

n -

9 5

J a

n -

9 6

J a

n -

9 7

J a

n -

9 8

J a

n -

9 9

J a

n -

0 0

J a

n -

0 1

J a

n -

0 2

J a

n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day OPEX Interest + spread Depreciation

VLCC rough example: OPEX, plus interest + spread on new cost, plus depreciation

INTEREST(new cost)

Depreciation –over 20 yrs

OPEX

Low interest means financialperformance today dominated bydepreciation – so don’t ignore theP&L statement, especially in flat

S&P market!

8a

Average 1990-2014 $36,000/day



The VLCC Return – Eating the Balance Sheet

0

20

40

60

80

100

120

J a n -

9 0

J a n -

9 1

J a n -

9 2

J a n -

9 3

J a n -

9 4

J a n -

9 5

J a n -

9 6

J a n -

9 7

J a n -

9 8

J a n -

9 9

J a n -

0 0

J a n -

0 1

J a n -

0 2

J a n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day

ReturnDepreciationInterest + spreadOPEXVLCC Earnings (12 month average)

VLCC rough example: OPEX, plus interest + spread on new cost, plus depreciation

INTEREST(new cost)

Revenue:12 monthaverageearnings

OPEX

8b

It wasn’t agift, it was

a loan!



The Aframax Tanker – Cost & revenue

0

5

1015

20

25

30

35

40

45

50

55

60

65

J a n -

9 0

J a n -

9 1

J a n -

9 2

J a n -

9 3

J a n -

9 4

J a n -

9 5

J a n -

9 6

J a n -

9 7

J a n -

9 8

J a n -

9 9

J a n -

0 0

J a n -

0 1

J a n -

0 2

J a n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day

Depreciation

Interest + spreadOPEX

12 month earnings

Aframax rough example: OPEX, plus interest + spread on new cost, plus depreciation

I N T E R E S T

( n e w c o s t )

Revenue:

12 monthaverageearnings

OPEX

8b



The Capesize Cost & Revenue

05

1015202530354045505560657075

80859095

100105110115120

125

J a n -

9 0

J a n -

9 1

J a n -

9 2

J a n -

9 3

J a n -

9 4

J a n -

9 5

J a n -

9 6

J a n -

9 7

J a n -

9 8

J a n -

9 9

J a n -

0 0

J a n -

0 1

J a n -

0 2

J a n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day

Depreciation

Interest

OPEX

Handy earnings

Capesize rough example: OPEX, plus interest on new cost, plus depreciation

In teres t


OPEX

Cost based on

capital, OPEX& interest

8a



Panamax Bulker Cost & Revenue

036912

1518212427303336

39424548515457

60

J a n -

9 0

J a n -

9 1

J a n -

9 2

J a n -

9 3

J a n -

9 4

J a n -

9 5

J a n -

9 6

J a n -

9 7

J a n -

9 8

J a n -

9 9

J a n -

0 0

J a n -

0 1

J a n -

0 2

J a n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day

Depreciation

Interest

OPEX

Panamax Earnings

Panamax bulker rough example: OPEX, plus interest on new cost, plus depreciation

In teres t

Depreciation – over 20 yrs

OPEX

Cost based on


8a



The Handy Bulker Cost & Revenue

0

510

15

20

25

30

35

40

45

J a n -

9 0

J a n -

9 1

J a n -

9 2

J a n -

9 3

J a n -

9 4

J a n -

9 5

J a n -

9 6

J a n -

9 7

J a n -

9 8

J a n -

9 9

J a n -

0 0

J a n -

0 1

J a n -

0 2

J a n -

0 3

J a

n

' 0 4

J a

n

' 0 5

J a

n

' 0 6

J a

n

' 0 7

J a

n

' 0 8

J a

n

' 0 9

J a

n

' 1 0

J a

n

' 1 1

J a

n

' 1 2

J a

n

' 1 3

J a

n

' 1 4

$000/day DepreciationInterest + spreadOPEXHandy earnings

Handy rough example: OPEX, plus interest on new cost, plus depreciation

In teres t


OPEX

Cost based on


Depreciation

8a



•

Sets the framework forbusiness today

• The policies of thecharterers determinesthe size of the spot and

time charter markets

•

Charterers and ownersare people, so the waythings develop dependson how they play the

game•

Owners focus on shipassets more thantransport

summary of Figure 4.1 on page 137 of ME 3 rd Edition

18

3. Transport supply

the owners

the charterers

2. ship demand

1. world economy

THE MARKET

F r e i g h t

e a r n i n g s

cash

1.orders

o u t

2 n d h an d pr i c e s

2. scrapping

i n

cash

Fleet m dwt

Speed



A. Market Balance Model: Demand Growth

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1 9 6 5

1 9 7 0

1 9 7 5

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

2 0 0 5

2 0 1 0

2 0 1 5

2 0 2 0

Ship DemandForecast7 per. Mov. Avg. (Ship Demand )

% growthShip Demand

The chart shows annual growth of ship demand based on sea trade(bars) and the 7 year average (line). Growth rate recently about 4% pa

1973Oil crisis

1979Oil crisis

1989-92Financial

crisis

2001Dot.com

crisis2007

Credit Crisis

Source: Fearnleys Annual Review, Clarksons SRO

Average trade growth about 3.8% pa

19



2. Market Balance – Cargo Fleet Growth

6%

9%9%9%9%

14%

10%

11%11%11%

12%

10%

8%

5%

1%1%

-4%

1%

-1%

-3%

-1%

-4%

-1%

0%

2%

3%3%

2%

1%

2%

0%

7%

5%

8%

1%1%

3%

2%2%

3%

6%

7%7%7%

2%

7%

10%

16%

6%

5%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1 9 6 5

1 9 7 0

1 9 7 5

1 9 8 0

1 9 8 5

1 9 9 0

1 9 9 5

2 0 0 0

2 0 0 5

2 0 1 0

2 0 1 5

Fleet 7 per. Mov. Avg. (Fleet)

% growthCargo Fleet

The chart shows the annual growth rate of the fleet (bars)and the 7 year average (line)

1973Oil crisis

1979Oil crisis

1989-92

Financialcrisis

1997 Asiacrisis

2001Dot.com

crisis

2007Credit Crisis

Source: World Bank, Fearnleys Annual Review Updated sept 2014

4% pa

20



C. Market Balance Model: Supply & Demand

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

1 9 6 5

1 9 6 8

1 9 7 1

1 9 7 4

1 9 7 7

1 9 8 0

1 9 8 3

1 9 8 6

1 9 8 9

1 9 9 2

1 9 9 5

1 9 9 8

2 0 0 1

2 0 0 4

2 0 0 7

2 0 1 0

2 0 1 3

Demand Fleet

% growth

Updated Feb 2014

3. Neutral

Fleetgrowth rate

%

This chart compares fleet % growth (red line) with demand % growth (bluebars), showing how the surplus was created & removed

21

NB: fleet % and demand % both 7 year moving average, in arrears



-20%

-10%

0%

10%

20%

30%

40%

50%

1

9 6 3

1

9 6 5

1

9 6 7

1

9 6 9

1

9 7 1

1

9 7 3

1

9 7 5

1

9 7 7

1

9 7 9

1

9 8 1

1

9 8 3

1

9 8 5

1

9 8 7

1

9 8 9

1

9 9 1

1

9 9 3

1

9 9 5

1

9 9 7

1

9 9 9

2

0 0 1

2

0 0 3

2

0 0 5

2

0 0 7

2

0 0 9

2

0 1 1

2

0 1 3

2

0 1 5

2

0 1 7

2

0 1 9

D. Market Balance Model: Surplus/DeficitSurplus capacity % demand)

1974-1990Big surplus of

ships after1973 oil crisis

2007Credit Crisis

1973Oil crisis

1979 Oil crisis

1997-2008Shortage of ships

Today

Six yearsinto crisis

c.11%surplus.

Stuck in a rut?If trade grows at

3.5% pa andyards deliver 85m dwt a year, the

surplus will stillbe there in 2020

22



Millionairefor a day

Are thesesovereignbonds for

the bin, pal?

9



-18

-13

-8

-3

2

7

12

17

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

OECD

OECD Industrial Production

OECD“wobbling”

CreditCrisisDot.com

Crisis

Updated May 2014

10

% growthIndustrial

production



-18

-13

-8

-3

2

7

12

17

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

OECD China

% growthIndustrial

production

China! still moving mountains ChinaSlower andsea trade

surge couldbe peaking

out

CreditCrisisDot.com

Crisis

Updated May 201411


24/98


-18

-13

-8

-3

2

7

12

17

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

OECD

Asia less China & JapanChina

Asia (exc China & Japan) struggling

Asia,(excludingJapan andChina) issluggish

CreditCrisisDot.com

Crisis

Updated Sept 2014

AnotherCrisis?

12

% growthIndustrial

production


25/98


Oil Price Still a Critical Driver

01020

30

4050

6070

8090

100110120

130

1 8 6 1

1 8 6 7

1 8 7 3

1 8 7 9

1 8 8 5

1 8 9 1

1 8 9 7

1 9 0 3

1 9 0 9

1 9 1 5

1 9 2 1

1 9 2 7

1 9 3 3

1 9 3 9

1 9 4 5

1 9 5 1

1 9 5 7

1 9 6 3

1 9 6 9

1 9 7 5

1 9 8 1

1 9 8 7

1 9 9 3

1 9 9 9

2 0 0 5

2 0 1 1

$

p e r b a r r e l

$ money of the day

Cheap oil encouraged bigger, faster ships

Expensiveoil changes

the businessmodel


26/98


China Imports - Wobble or Worse

0

500

1000

1500

2000

2500

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

MILLION TONNES

Sea trade has grown very

fast for 15 years. This year itis growing at only 2% pa.many issues includingpollution, construction, coalimport ban etc

?growth based onJan-Aug actuals


27/98


China Monthly Bulk Imports

•

Over the last 12 monthsChina’s bulk imports havenot fallen

• An increase in iron oreimports has been offset by afall in coal and minor bulks

• This sort of thing hashappened before, but

anecdotal evidence suggestsit’s a trend to watch

100

110

120

130

140

150

160

S e p2 0 1 3

O c t 2 0 1 3

N ov 2 0 1 3

D e c 2 0 1 3

J an2 0 1 4

F e b 2 0 1 4

M ar 2 0 1 4

A pr 2 0 1 4

M a y 2 0 1 4

J un2 0 1 4

J ul 2 0 1 4

A u g2 0 1 4

Million tonnes/month


28/98


A Few China Statistics

•

Industrial production growth slipped to 6.9% inyear to August, lowest since spring 2009

• Floor space under construction down 37% in year

to July, but finished floor space only 9%• House completions down 29% in year to August

• Value of imports down 2%, exports up 14%

•

Iron ore imports up 13% in 2014, but steelproduction up 9% but iron ore supply up 14% andsteel exports up 39%, steel price down 8-11%

• Coal imports down 2% in 2014 (estimate)


29/98


I LOVE

orderingnew ships

I ‘ve reallygone off

ordering ships

I should never

have orderedthose bulkers

Lo an

I made millionsorderingagainst

timecharters

One of thosenice shipyardsarranged some

credit, sir

2

$


30/98


Investment rises to $107 billion in 2013

1.

Investment in newships to August2014 was $63.7billion

8 13 7 5 13 11 10 21 21 23

5539 35

7 15 6 8 16 9

5 6

3 7 5 3 7

11 13 14

25

105

68

13

34

17 9

32

161 2

0 13 4 3

2 12 9

9

5

1

0

1

1110

8

79

35 6

117 4

22

21 28

28

47

17

1

8

18

14

18

612 14

17 14

16

7 9

13

21

33

40

61

42

7

27

43

58

39

21

0204060

80100120140160180

200220240260280300

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

Bill $

Orders

20

25

30

35

40

45

50

55

60

65

3,600 TEU

$MM

Others

Container

LPG

LNG

Bulk

Tankers

New 3600 TEU $MM

Investment in new ships & newbuilding prices

Investment In New Ships 1996-2014

Other

Offshore

Container

Bulker

Tanker

Cruise

Gas

Investment toend August

was $64.7 m


31/98


Top Ten Shipping InvestorsFirst half 2014 by Investor Country of Domicile

7.3

6.0

2.92.9

2.8

2.3

2.32.2

1.1

1.1

0 5 10 15

Greece

China

JapanGermany

Singapore

USA

ItalyNorway

UK

S Korea

$ billion orders 1st half 2014

Europe

48%

Asia40%

N America8%

Other4%

Contracts $39.9 bn 1st half 2014

Updated Oct 2014


32/98


0

20

40

60

80

100

120

140

1967 1972 1977 1982 1987 1992 1997 2002 2007 2012

$ millionVLCC Suezmax Aframax Tanker

Products Capesize Panamax Bulk30,000 dwt bulker 1600 TEU 6700 TEU

Source: Compiled from several sources including Fearnleys, CRSL

Shipbuilding Prices

Aframax$54 MM

Panamax$29.5 MM

Updated Oct 2014


33/98


Shipbuilding Price Index

105115

125

135

145

155

165

175

185

195

J a n ' 0 4

J a n ' 0 5

J a n ' 0 6

J a n ' 0 7

J a n ' 0 8

J a n ' 0 9

J a n ' 1 0

J a n ' 1 1

J a n ' 1 2

J a n ' 1 3

J a n ' 1 4

N u m b e r o f Y

a r d s

Source: Clarkson Research

Jan 2013was a price

trough whichkick started

ordering


34/98


Shipbuilding 1963-2014

0

2040

60

80

100

120140

160

180

200

220240

1 9 6 3

1 9 6 5

1 9 6 7

1 9 6 9

1 9 7 1

1 9 7 3

1 9 7 5

1 9 7 7

1 9 7 9

1 9 8 1

1 9 8 3

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

2 0 0 7

2 0 0 9

2 0 1 1

2 0 1 3

2 0 1 5

2 0 1 7

M i l l i o n D W T D e

l i v e r i e s

Source Maritime Economics 3rd Ed Martin Stopford (Updated August 2012)

OrdersIn 2013 orders

placed for 174mdwt (and 74 m dwtin first 7 months of

2014)

Orders

Deliveries

About80-90 mdwt pa?

15

Tankers,21.4, 20%

Bulkers,62.8, 58%

Containers,15.9, 15%

Offshore,2.2, 2%

Other, 5.6,5%

2013 Deliveries m dwt

f S


35/98


Number of Active Shipyards

677

637 618 625

664 696

759808

907

983

1123

1168

1020

1098

696

918

0

100200

300

400

500

600700

800

900

1000

11001200

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

N u m b e r o f Y a r d s



36/98


Average Yard Output 1998-2013

0

2040

60

80

100

120140

160

180

200

220240

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

Y a r d O u t p u t I n

d e x

Averageyard

produces50% more

than in 2009


World Cargo Ship Demolition


37/98


World Cargo Ship Demolition

0

10

20

30

40

50

60

70

1

9 7 3

1

9 7 6

1

9 7 9

1

9 8 2

1

9 8 5

1

9 8 8

1

9 9 1

1

9 9 4

1

9 9 7

2

0 0 0

2

0 0 3

2

0 0 6

2

0 0 9

2

0 1 2

0%

1%

2%

3%

4%5%

6%

7%

8%

Shows the demolition (bars) on left axis & % fleet demolished on right

Million Dwt % fleet

M Dwtdemolishedin year (left

axis)

% cargo fleetscrapped(right axis)

Major Fleets % Growth pa


38/98


30th September 2010

Major Fleets - % Growth pa

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 9 8 8

1 9 9 2

1 9 9 6

2 0 0 0

2 0 0 4

2 0 0 8

2 0 1 2

Tankers Bulkers Containers

% growth

W ld M h t Fl t G th


39/98


0

200

400

600

8001,000

1,200

1,400

1,600

1 9 6 3

1 9 6 5

1 9 6 7

1 9 6 9

1 9 7 1

1 9 7 3

1 9 7 5

1 9 7 7

1 9 7 9

1 9 8 1

1 9 8 3

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

2 0 0 7

2 0 0 9

2 0 1 1

2 0 1 3

2 0 1 5

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

World Merchant Fleet GrowthMillion dwt (year end)

Growth rate of thefleet (right axis)

Has dropped below4% pa roughly in

line with tradegrowth

% fleet growth

16


40/98


China and SKorea “neck &neck” for top

position

hart 11: Regional Shipbuilding Shares 1903 2013


41/98


0

10

20

30

40

50

60

70

80

90

100

1 9 0 3

1 9 0 8

1 9 1 3

1 9 1 8

1 9 2 3

1 9 2 8

1 9 3 3

1 9 3 8

1 9 4 3

1 9 4 8

1 9 5 3

1 9 5 8

1 9 6 3

1 9 6 8

1 9 7 3

1 9 7 8

1 9 8 3

1 9 8 8

1 9 9 3

1 9 9 8

2 0 0 3

2 0 0 8

2 0 1 3

% t

o t a l s h i p

s l a u n c h e

Source; Lloyds Register of Shipping, Clarkson Research

FIGURE 15.1 Shi buildin market shares 1902-2013

Korea

Japan

EuropeBritain

other countries

Scandin-avia

USA China

See: page 616

hart 11: Regional Shipbuilding Shares 1903-2013

CGT35.9%GT35.4%

CGT33.8%GT35%

CGT

18.4%GT20.4%

GT1.7%


42/98


01

2

3

4

5

6

78

9

10

11

12

13

14

15

16

17

1 9 9 6 Q 1

1 9 9 7 Q 2

1 9 9 8 Q 3

1 9 9 9 Q 4

2 0 0 1 Q 1

2 0 0 2 Q 2

2 0 0 3 Q 3

2 0 0 4 Q 4

2 0 0 6 Q 1

2 0 0 7 Q 2

2 0 0 8 Q 3

2 0 0 9 Q 4

2 0 1 1 Q 1

2 0 1 2 Q 2

2 0 1 3 Q 3

2 0 1 4 Q 4

2 0 1 6 Q 1

2 0 1 7 Q 2

2 0 1 8 Q 3

2 0 1 9 Q 4

M CGT

China South Korea

Japan Other Asia

Europe Others


Quarterly Shipbuilding Output

Panamax$29.8 MM

About 30% down


43/98


01

2

3

4

5

6

78

9

10

11

12

13

14

15

16

17

1 9 9 6 Q 1

1 9 9 7 Q 2

1 9 9 8 Q 3

1 9 9 9 Q 4

2 0 0 1 Q 1

2 0 0 2 Q 2

2 0 0 3 Q 3

2 0 0 4 Q 4

2 0 0 6 Q 1

2 0 0 7 Q 2

2 0 0 8 Q 3

2 0 0 9 Q 4

2 0 1 1 Q 1

2 0 1 2 Q 2

2 0 1 3 Q 3

2 0 1 4 Q 4

2 0 1 6 Q 1

2 0 1 7 Q 2

2 0 1 8 Q 3

2 0 1 9 Q 4

M CGT

China South Korea

Japan Other AsiaEurope OthersChina O/B Japan OBOth Asia O/B Europe O/BOther O/B


Quarterly Shipbuilding Output

Possible increasenext couple of years

Panamax$29.8 MM

Market Leaders: QuarterlyUpdated Oct 2014


44/98


0

1

2

3

4

5

6

7

8

1 9 9 6 Q 1

1 9 9 7 Q 2

1 9 9 8 Q 3

1 9 9 9 Q 4

2 0 0 1 Q 1

2 0 0 2 Q 2

2 0 0 3 Q 3

2 0 0 4 Q 4

2 0 0 6 Q 1

2 0 0 7 Q 2

2 0 0 8 Q 3

2 0 0 9 Q 4

2 0 1 1 Q 1

2 0 1 2 Q 2

2 0 1 3 Q 3

2 0 1 4 Q 4

2 0 1 6 Q 1

2 0 1 7 Q 2

2 0 1 8 Q 3

2 0 1 9 Q 4

M CGT

China South Korea


Market Leaders: QuarterlyShipbuilding Output

About 30% down


45/98



46/98


China Shipbuilding

•

China’s output grew from 2.9m cgt in 2004 to 20.8 m CGTin 2011

• Then fell to 13.2 m CGT in2013, 35.7% of world

•

Roughly 144 active yardsactive but the total yard countin 2013 was 450. Many have

• Orderbook of 46.7 M CGT is3.5 years work

CSIC,4,640 ,10%

CSSC,

11,169 ,24%

FO,

2,877 ,6%

JV,1,587 ,

3%

Local,26,494 ,

57%

MILLION CGT ORDERBOOK 2014


47/98


China Orderbook

!"#$ %& ()! *+,-$. % /0! 12 /34 5 6()!78+9: (;..&? @A=B? CD DEA?CF G@5

8+9: H.$ (;..= @@ =GCA>=C F5

(.+ == ? =AF=@ @5

N&*&)& @&E =D = GGACBC F5N&K&)& ?&C >C @ =BA@=G =5

%C @5

HPPIQR.$ S$.2FC = >AFDC D5

H4Q$. /." (;.MR C&= FB= @D >FA=?? =?5!;L:$. G&G =>B == BDA>D@ @=5

).;LT !R4;9 >E&B =AG?C @G@&C @??5

Chi O t t C d With S KUpdated Oct 2014


48/98


0

1

2

3

4

5

6

7

8

1 9 9 6 Q 1

1 9 9 7 Q 2

1 9 9 8 Q 3

1 9 9 9 Q 4

2 0 0 1 Q 1

2 0 0 2 Q 2

2 0 0 3 Q 3

2 0 0 4 Q 4

2 0 0 6 Q 1

2 0 0 7 Q 2

2 0 0 8 Q 3

2 0 0 9 Q 4

2 0 1 1 Q 1

2 0 1 2 Q 2

2 0 1 3 Q 3

2 0 1 4 Q 4

2 0 1 6 Q 1

2 0 1 7 Q 2

2 0 1 8 Q 3

2 0 1 9 Q 4

Million CGT

Output per

Quarter

China

South Korea

China O/B


China Output Compared With S. Korea

Updated Oct 2014


49/98


3 4

5 7

10

13

20 21 20

13

0

5

10

15

20

25

2 0 0 4

2 0 0 6

2 0 0 8

2 0 1 0

2 0 1 2

2 0 1 4

2 0 1 6

2 0 1 8

M CGT/QTR


China Shipbuilding Output


50/98


China Top 20 Yards

S hi pyard S hort n am e C lass Nodocks

Dwt Length Slipways

Berths No Dwt CGT No Dwt CGT YearsOutput

Rank

Jiangsu New YZJ Jingjiang Local 2 260 1,000 - 2 29 1,666 668 113 10,820 2,825 4.2 1

Hudong Zhonghua Shanghai CSSC 1 121 360 5 - 16 1,092 337 51 3,989 2,332 6.9 2

Shanghai Waigaoqiao Shanghai CSSC 2 320 540 - - 16 3,702 581 68 13,295 2,182 3.8 3

Dalian Shipbuilding Dalian CSIC 6 323 550 5 10 23 3,530 701 48 7,753 1,807 2.6 4

Chengxi Shipyd. Jiangyin CSSC 5 76 330 1 - 18 889 288 93 5,477 1,583 5.5 5

Zhejiang Yangfan Zhoushan Local 2 93 500 1 3 16 830 251 95 4,646 1,566 6.2 6

CIC (Jiangsu) Jiangdu Local 6 110 580 1 - 14 678 220 75 4,623 1,447 6.6 7

New Times S.B. Jingjiang Local 1 320 588 - 3 8 946 215 43 4,627 1,301 6.1 8

Sinopacific Dayang Yangzhou Local 1 119 360 2 - 22 1,330 377 87 4,166 1,201 3.2 9

Jinling Shipyard Nanjing Local 2 93 320 8 1 13 692 219 61 3,836 1,165 5.3 10

Hantong S.Y. Nantong Local - 208 400 3 2 8 460 133 63 4,399 1,162 8.7 11

Guangzhou Longxue !"#$%&'

CSSC 4 328 490 - 4 6 524 127 34 6,951 1,138 9.0 12

Nantong Cosco KHI Nantong JV 2 316 500 - 2 12 976 388 48 4,593 1,093 2.8 13

Jinhai Heavy Ind. Zhoushan Local 5 320 512 - 4 - - - 35 4,080 1,084 14

Beihai Shipyard Qingdao CSIC 5 293 530 - 1 12 1,376 284 32 6,684 1,077 3.8 15

Guangzhou SY Intl Guangzhou CSSC 1 112 200 3 - 12 540 235 42 2,626 1,044 4.4 16Taizhou Sanfu Taizhou Local - 93 600 6 1 8 391 128 69 2,636 996 7 .8 17

Jiangsu Rongsheng Nantong Local 4 401 580 - - 10 2,380 345 36 4,769 946 2.7 18

Weihai Samjin Weihai FO 1 82 320 - 3 4 158 57 56 2,087 921 16.2 19

STX Dalian Dalian FO 1 404 460 4 - 8 950 189 33 2,484 870 4.6 20

!"#"$%&' ("$%)%&%*+ ,--& /012 ,34*35667 /018


51/98


China Top Yards 21-40

S hi pyard S hort n am e C las s No

docks Dwt Length Slip

ways Berths No Dwt CGT No Dwt CGT Years

Output Rank

Zhejiang Ouhua Zhoushan Local 3 82 340 - 1 17 773 282 48 1,925 820 2.9 21

Tsuneishi Zhoushan Zhoushan FO - 99 - - - 18 1,284 325 46 3,029 811 2.5 22

Taizhou Kouan SB Taizhou Local - 64 200 3 - 5 194 76 48 2,258 755 9.9 23

Sainty SB (Yangzhou) Yangzhou Local 2 82 350 1 2 6 303 96 40 2,057 735 7.7 24

Bohai Shipbld. Huludao CSIC 4 388 480 1 - 10 1,495 265 26 3,774 716 2.7 25

Jiangnan Changxing Shanghai CSSC 2 206 580 - 5 12 1,155 396 18 1,460 624 1.6 26uangpu enc ong

Guangzhou CSSC 2 77 360 1 - 11 613 178 35 1,328 585 3.3 27

Jiangnan SY Group Shanghai CSSC 5 209 275 - - 7 463 124 28 1,404 563 4.5 28Jiangsu Eastern Jingjiang Local 1 208 420 2 1 10 587 163 29 2,393 551 3.4 29

Sinopacific Offshore Nantong Local - 24 - - - 6 70 70 23 454 498 7.1 30

Tianjin Xingang HI Tianjin CSIC 5 180 520 2 - 10 582 166 22 1,356 494 3.0 31

Qingshan Shipyard Wuhan Local - 64 780 9 - 10 297 158 31 1,620 494 3.1 32

Xiamen S.B. Xiamen Local 1 82 245 2 2 10 297 112 23 172 489 4.4 33

Wenchong CSSC 5 47 300 1 1 11 314 180 30 780 486 2.7 34

Sinopacific Zhejiang Ningbo Local 1 119 120 5 1 30 344 255 50 937 475 1.9 35

COSCO Dalian Dalian Local 3 302 350 2 11 6 488 119 25 985 405 3.4 36

COSCO Zhoushan Zhoushan Local 3 286 539 2 6 6 390 106 22 1,535 405 3.8 37

Dalian CO SCO KHI Dalian JV 2 320 700 - 3 6 1,037 177 19 1,665 384 2.2 38

Nantong Mingde Nantong Local 2 115 350 3 1 2 109 36 24 816 368 10.2 39

Shanhaiguan S.Y. !"#$%&'#$(

CSIC 6 335 440 - 19 9 568 155 25 1,141 360 2.3 40

!"#"$%&' ("$%)%&%*+ ,--& /012 ,34*35667 /018


52/98



Shi pyard S hort name C lass No

docks Dwt Length Slipways Berths No Dwt CGT No Dwt CGT Rank

Taizhou Catic SB Taizhou Local 1 208 350 - 1 4 267 93 11 1,819 345 41

Shanghai S.Y. Shanghai CSSC 5 114 262 1 4 15 688 302 17 422 333 42

Fujian Mawei Fuzhou Local 1 37 26 3 1 9 43 65 43 171 320 43

Zhejiang Zhenghe SB Zhoushan Local - 82 210 1 2 5 313 87 18 1,055 316 44

AVIC Dingheng S.B. Yangzhou Local - 37 - - - 3 18 31 23 431 309 45

AVIC Weihai SY Weihai Local 2 93 389 - - 4 112 60 19 967 296 46

Changxing S.B Changxing CSSC 2 319 520 - 4 6 1,402 220 7 713 284 47

Zhoushan Wuzhou Zhoushan Local 1 58 214 1 2 6 292 94 16 467 269 48Jinglu Shipyard Penglai Local 2 82 369 1 1 4 301 76 14 1,004 263 49

Q ingdao Yangfan Q ingdao Local 2 206 480 - 1 4 412 82 11 1,448 262 50

Fujian Southeast Fuzhou Local - 9 300 3 - 29 61 158 46 110 254 51

Jiangzhou Union SB Ruichang Local 1 17 300 3 1 3 43 35 27 288 228 52an ong ongq ang

Nantong Local - 64 850 2 4 2 54 37 23 506 228 53

CO SCO Guangdong Guangzhou Local 2 128 269 3 6 7 274 100 26 171 199 54

Samsung Ningbo Ningbo FO - 50 - - - 1 18 21 8 400 196 55

Jiangdong Sh ipyard Wuhu Local 1 65 270 3 3 3 96 39 11 363 152 56

Wuchang S.B. Wuhan CSIC 1 82 480 2 4 7 185 88 11 207 142 57

Zhoushan Zengz hou Zhoushan Local - 64 416 2 1 1 64 18 10 390 139 58

Yichun W ujiazui S.B. Nanjing Local 1 80 240 - - 1 79 20 7 535 134 59

Shandong Huanghai Rongcheng Local - 32 200 4 1 14 326 217 8 81 134 60

!"#"$%&' ("$%)%&%*+ ,--& /012 ,34*35667 /018


53/98



S hi pyard Short nam e C lass Nodocks

Dwt Length Slipways

Berths No Dwt CGT No Dwt CGT YearsOutput

Rank

Guangzhou Hangtong Guangzhou Local - 9 465 2 2 9 24 56 20 56 129 2.3 61

Guangxin S.B. Guangzhou Local 1 7 360 1 3 18 55 17 53 117 2.1 62

Huatai Hvy. Ind. Nantong Local - 57 - 2 3 3 151 47 8 308 113 2.4 63

Yangzhou Guoyu Yangzhou Local 1 75 410 4 2 4 145 55 8 270 112 2.0 64

Qi dong Daoda Nantong Local 2 205 550 1 1 4 81 39 12 310 111 2.8 65

Jiangmen Nanyang Jiangmen Local 2 39 400 - 1 9 318 120 8 312 111 0.9 66

New Hantong Shi pyard Yangzhong Local 1 82 480 - 3 3 195 53 5 195 107 2.0 67Fujian C rown O cean Lianjiang Local - 83 275 3 1 1 24 10 12 257 106 10.6 68

Shanghai Zhenhua Jiangyin Local 1 58 220 - 1 4 84 70 9 72 99 1.4 69

Xinl e S.B. Ningbo Local 2 25 130 2 2 2 16 13 6 103 94 7.2 70

Zhoushan Wi son Zhoushan Local 1 150 400 1 3 - - - 3 150 92 71

Rongcheng Shenfei Rongcheng Local 1 46 1,650 4 1 3 101 55 4 150 87 1.6 72

Jiangsu Zhenjiang Zhenjiang Local - 33 400 3 2 4 16 33 11 46 86 2.6 73

Yuexin S.B. Panyu Local 4 5 120 6 1 7 8 33 16 33 81 2.5 74

Haitong O ffshore Eng Rugao Local 1 64 380 - 1 - - - 7 233 81 75

Nanjing Dongze Nanjing Local - 37 - 2 - 2 70 26 6 224 78 3.0 76

Yantai C IMC Raffles Yantai JV 2 60 380 - 1 - - - 3 107 75 77

Jingjiang Nanyang Jingjiang Local 1 6 220 4 - 8 16 43 10 39 71 1.7 78

Unknown Chi na Unknown Local - 307 - - - 1 8 8 12 30 68 8.5 79

Afai Southern Panyu Local - 1 170 1 1 1 1 3 10 7 63 21.0 80

!"#"$%&' ("$%)%&%*+ ,--& /012 ,34*35667 /018


54/98


www.clarksons.com 54 August 2014

Bulker TankerContainer

ship Gas Offshore Other Total

Builder M.CGT M.CGT M.CGT M.CGT M.CGT M.CGT M.CGT

China P.R. 7.8 1.4 1.8 0.2 0.9 1.1 13.3

S. Korea 1.4 3.5 4.8 1.6 0.7 0.5 12.5

Japan 5.1 0.6 0.3 0.3 0.1 0.6 6.8

Philippines 0.4 0.0 0.1 0.0 0.6Norway 0.3 0.0 0.4

Vietnam 0.2 0.0 0.1 0.0 0.3

Germany 0.0 0.3 0.3

Taiwan 0.3 0.0 0.3

USA 0.0 0.2 0.2France 0.2 0.2

Other 0.1 0.3 0.1 0.0 1.0 0.6 2.2

Total 15.1 5.8 7.3 2.1 3.2 3.5 37.0

Chart 12: 2013 Shipyard Output by Country

2013 Output by Country and Ship Type


55/98


www.clarksons.com 55

World Shipbuilding Output 1H 2014 – m.CGT

August 2014

Bulker Tanker Containership Gas Offshore Other Total

BuilderCountry

M.CGT M.CGT M.CGT M.CGT M.CGT M.CGT M.CGT

China P.R. 3.2 0.7 1.4 0.0 0.5 0.3 6.1S. Korea 0.3 1.4 2.2 1.2 0.5 0.4 6.0

Japan 2.7 0.2 0.1 0.1 0.0 0.3 3.5

Philippines 0.2 0.3 0.5

Germany 0.0 0.2 0.2

Norway 0.2 0.0 0.2

Taiwan 0.0 0.2 0.2

USA 0.0 0.1 0.2

Italy 0.0 0.2 0.2Romania 0.1 0.0 0.0 0.1

Other 0.0 0.1 0.0 0.4 0.3 0.9

Total 6.4 2.4 4.2 1.4 1.8 1.7 18.0


56/98


30th September 2014

• Crude demandhardly growing

• Products better

• Scrapping moderate

•

Earnings volatile

Cheap oil –why not givethe Hummer

a run?

Tanker Earnings Monthly September 2014


57/98


Tanker Earnings Monthly September 2014

Figure 11 Tanker earnings trends 1990 to 2014

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

J a n - 9 0

J a n - 9 1

J a n - 9 2

J a n - 9 3

J a n - 9 4

J a n - 9 5

J a n - 9 6

J a n - 9 7

J a n - 9 8

J a n - 9 9

J a n - 0 0

J a n - 0 1

J a n - 0 2

J a n - 0 3

J a n '

0 4

J a n '

0 5

J a n '

0 6

J a n '

0 7

J a n '

0 8

J a n '

0 9

J a n '

1 0

J a n '

1 1

J a n '

1 2

J a n '

1 3

J a n '

1 4

$ 0 0 0 / d a y

e a r n i n g s

VLCC

Suezmax

Aframax

Products

12 per. Mov. Avg. (VLCC)

W ld Oil D d & IEA F t


58/98


World Oil Demand & IEA Forecast

• World oil demand isvery cyclical

•

But recently it hasbeen growing at 1 m

bpd a year• As shown in graph

opposite

70

75

80

85

90

95

100

1 Q 9 9

1 Q 0 0

1 Q 0 1

1 Q 0 2

1 Q 0 3

1 Q 0 4

1 Q 0 5

1 Q 0 6

1 Q 0 7

1 Q 0 8

1 Q 0 9

1 Q 1 0

1 Q 1 1

1 Q 1 2

1 Q 1 3

1 Q 1 4

1 Q 1 5

Million bpd world oil demand

Source: IEA Monthly Review of Oil Industry

Oil Demand Trend (Importers only)


59/98


Oil Demand Trend (Importers only)

65.0

67.0

69.0

71.0

73.0

75.0

77.0

79.0

81.0

83.0

85.0

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

M i l l i o n b a r r e l s p

e r d a y

IEA Forecast Sept 2010

•

This excludes nonimporters (Russia &Middle East)

•

Average increase recentlyabout 1 m bpd (since2010)

•

Demand for 7 m dwt ofcrude tankers more eachyear, if it all comes in bysea

• Also products trade

needs to be taken intoaccount

Crude and Products Trade Growth


60/98


30th September 2010

Crude and Products Trade Growth

-10%

-5%

0%

5%

10%

15%

20%

1 9 8 7

1 9 9 1

1 9 9 5

1 9 9 9

2 0 0 3

2 0 0 7

2 0 1 1

Crude Products 5 per. Mov. Avg. (Crude)

% growth

T k O d D li i & D liti


61/98


30th September 2014

-10

0

10

20

30

4050

60

70

80

90

1 9 8 8

1 9 8 9

1 9 9 0

1 9 9 1

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2014 Orderbook

Deliveries

Deliveries Forecast

Demolition forecast

Orderbook

Orders

Demolition

Sept 2014orderbook of 72

m dwt 14% of the

fleet

Tanker Orders, Deliveries & Demolition

Figure 13: Tanker orders, deliveries, scrapping and future deliveries

Million dwt


62/98


30th September 2014

Tanker Fleet Age Profile

•

The Tanker fleet is young• Only 7 m dwt of single hull

tankers left

• Demolition running at

around 10 m dwt a year

0

100

200

300

400

500

600

700

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 9 3

1 9 9 5

1 9 9 7

1 9 9 9

2 0 0 1

2 0 0 3

2 0 0 5

2 0 0 7

2 0 0 9

2 0 1 1

2 0 1 3

year of delivery

n u m b e r d e l i v e r e d i n y e a

Double hull Single hull

Single hull fleetdown to 7 m dwt

Tanker Supply/Demand Balance 1963-2015


63/98

CLARKSON RESEARCH SERVICES LTD30th September 2015

Tanker Supply/Demand Balance 1963-2015

0

100

200

300

400

500

600

1 9 6 3

1 9 6 5

1 9 6 7

1 9 6 9

1 9 7 1

1 9 7 3

1 9 7 5

1 9 7 7

1 9 7 9

1 9 8 1

1 9 8 3

1 9 8 5

1 9 8 7

1 9 8 9

1 9 9 1

1 9 �

Documents

Stopford Cass 20 Oct 2014