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Cemtech DubaiDry bulk freight market & cement trading: trends and outlook

7 March 2011

Joel GrauShip broker

www.clarksons.com

Freight is in a declining trend

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2000

-01

2000

-07

2001

-01

2001

-07

2002

-01

2002

-07

2003

-01

2003

-07

2004

-01

2004

-07

2005

-01

2005

-07

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-01

2006

-07

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-01

2007

-07

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-01

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-07

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-01

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-07

2010

-01

2010

-07

2011

-01

BDI

Baltic Dry Index (BDI) since 2000 The average of the BDI over the past decade has been 3329, which was pulled by the unprecedented freight boom of 07 and 08.

The freight boom was a result of the continuous robust seaborne demand growth and a lack of ship output to meet that demand.

2008 witnessed the peak and trough of the BDI. The trough was caused by the world financial crisis which halted raw materials demand.

Since the advent of Chinas industrialisation and huge demand for raw materials, freight volatility has increased.

The 2010 BDI average = 2761 The 2011 BDI average to date =1282

Average = 1322

Average = 3512

Average = 5679

Average = 2635

11-year Average = 3329

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with spot freight rates down from last year

$56,816

$47,449

$116,049

$32,447

$106,021

$49,019

$41,574

$29,282

$42,656

$19,296 $17,338$11,342

$22,456$16,428

$25,041$33,298

$8,046$13,604 $13,411

$10,457

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

$110,000

$120,000

Capesize Panamax Supramax Handysize

$/d

ay

2007 2008 2009 2010 2011

-22%2010 year-on-year change +30% +30% +45%

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Cement only constitutes 3% of drybulk seaborne trade

Iron ore34%

Cement3%

Metal and ore products

5%

Coal30%

Grains11%

Steel7%

Fertilisers2%

Other ores4%

Forest products

4%

Drycargo seaborne trade commoditiesTotal drycargo seaborne trade is more than 3 billion tonnes Cement constitutes approximately 3% of total drycargo seaborne trade

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but is a more important commodity for the smaller ships

Smaller ship type commodities Handy/Supramax and Handysize

Fertilisers5%

Other ores10%

Steel16%

Cement 8%

Grains19%

Coal20%Forest products

9%

Metal and ore products

8%

Iron ore5%

Handysize:10,000 40,000 dwt

Handy/Supramax:40,000 60,000 dwt

The vessel types used for shipments are subject to load and discharger port restrictions and port facilitiesCargo volumes required/lot sizeCargo restrictions or requirements

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Drybulk fleet profiles

050

100150200250300350400450500550

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Supra/Handymax and Handysize fleet profile

HANDYSIZE M Dwt No of ships

Fleet on 1 Jan 2011 82.1 3,026

Orderbook on 1 Jan 2011% of Fleet

26.833%

82727%

Orderbook for delivery 2011

16 506

Recorded deliveries in Jan/Feb

1.2 36

Net fleet growth 2010 8.0%6.1

6.6%186

Net fleet growth 2011 (forecast)

6.6%5.4

4.5%135

SUPRA/HANDYMAX M Dwt No of ships

Fleet on 1 Jan 2011 109.0 2,164

Orderbook on 1 Jan 2011% of Fleet

53.849%

83439%

Orderbook for delivery 2011

23 411

Recorded deliveries in Jan/Feb

2.6 46

Net fleet growth 2010 18.5%17.0

16.0%299

Net fleet growth 2011 (forecast)

15.1%16.4

14.3%309

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Drybulk fleet age profileAge categories of ships Potential scrap pool (Based on special

surveys)

0%

10%

20%

30%

40%

50%

60%

70%

80%90%

100%

Cap

esiz

e

Pana

max

Han

dym

ax

Han

dysi

ze

0-5 6-10 11-15 16-20 21-25 26-30 31-35 35+

Capesize5th,6th

Panamax6th,7th,8th

Handy/Supramax6th,7th,8th

Handysize6th, 7th,8th,9th

2011 38 40 15 143

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Drybulk demolitions are likely to be high in 2011

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10

20

30

40

50

60

70

2008

-09

2008

-10

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-11

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-12

2009

-01

2009

-02

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-03

2009

-04

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-05

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-06

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-07

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-08

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-09

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-10

2009

-11

2009

-12

2010

-01

2010

-02

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-03

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-04

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-05

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-06

2010

-07

2010

-08

2010

-09

2010

-10

2010

-11

2010

-12

2011

-01

2011

-02

Num

ber o

f Shi

ps

Capesize Panamax Handy/Supramax Handysize

Monthly Drybulk Demolitions

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Drybulk seaborne trade continues to grow

530

909

1,0211,082

620

828

9491,006

471518

594657

452

542

623651

300

400

500

600

700

800

900

1,000

1,100

2003 2009 2010 2011f

Mill

ion

tonn

es

Iron ore Coal Agriculture related Construction related

Drybulk seaborne trade

+10.6%+4.5%

Smaller ship sizes

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Drybulk demand and supply balance

8%

9%

8%

6%

3%

-2%

14%

5% 6%

10%

12%

9%

10%

16%

7% 7%

2%

7% 7% 7%

10%

14%13%

5%

6%6%

3%

6%

2%

17%

9%

7%7%

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400

3,600

3,800

4,000

2003 2004 2005 2006 2007 2008 2009 2010(e) 2011 (f) 2012 (f) 2013 (f)

Trad

e in

Mill

ion

tonn

es

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

% y-o-y grow

th

Trade (Mt) Trade growth Required dwt growth Net fleet growth

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Conclusion Cement seaborne trade constitutes about 3% of total drybulk seaborne trade but

about 8% for the smaller ship sizes.

The strong fleet growth will continue during 2011 which will put freight rates under pressure.

Demolitions are likely to be high, especially for the ageing Handysize sector. Net fleet growth for the Handysize segment is therefore likely to be the lowest of all the sectors.

Demand for drybulk commodities are expected to be strong and grow by 5% this year.

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