Market Outlook Dry Bulk CommoditiesMarket Outlook Dry...
Transcript of Market Outlook Dry Bulk CommoditiesMarket Outlook Dry...
Market Outlook Dry Bulk CommoditiesMarket Outlook Dry Bulk Commodities
Dry Bulk Shipping China
International dry bulk trade
Dry Bulk ShippingTrends and forecasts
Steel products
Coking coal
China
Iron ore
ICrude steel production
Global economic growth Economic indicatorsOutlook dry bulk
Iron ore resources
Casper Burgering | Senior Sector EconomistCasper Burgering | Senior Sector Economist
ABN AMRO Group Economics | Sector Research
23rd February 2010, Greek Shipping Forum, Athens
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2
ab a o / / a e j /se ce/pub cat es/eco o sc _bu eau t
Source: ABN AMRO
Global crude steel production Crude steel production decreased -8.2% in 2009 y.o.y.
On average, crude steel production has grown 4.5%/y (period 1900-2009)
1.200
1.400
2003: Golf War 2
1946-1975: +4.2% /y
1976-1996: +3.3% /y
1997-2008: +5.0% /y
1900-1945: +5.3% /y
800
1.000Asian Financial crisis 1997
Early 1980s recession
Beginning of Modern Steel Industry: 1850
400
600
Great Depression
1929
World War II
Oil crisis
Oil crisis 1979
2001: IOC announce-ment
0
200
Mt
1989: fall Berlin wall1990: Golf War 1
Cold War Era (1946-1990)28 Mt
World War I
19291973
3
1850
1870
1890
1902
1906
1910
1914
1918
1922
1926
1930
1934
1938
1942
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Sources: IISI, ABN AMRO
Ferrous industry value chain
by road, rail & water
by road, rail & water
by road, rail & water
Nearly all steel industry related materials are relevant for the shipping industry
Transport Transport Transport
water waterwater
Crude steel industry
coking coal
Finished steel
End customers
Raw materials
automotiveflat steel pipes
iron ore
scrap engineering
constructionlong steel
HRC/CRC
tubes
wire rod
Semi finished products
Metal traders and steel service centers
50%
4
products
slabsbloombillets
Source: ABN AMRO
Worldwide dry bulk trade 50% of total dry bulk trade is ferrous industry related (coal, steel, iron ore, scrap)
21% of total dry bulk trade is agri business related (grains, sugar, forest products)Steel Scrap
Iron ore
Coke 1%
Pig iron 1%products 8%
p3%
30%
Other products
Phosphate1%
p17%
Thermal coal20%
1%
Bauxite2% Grains
10%Coking coal
7%
5Source: Clarkson Research Services
Dry bulk trade 2000-2010 Growth in all dry bulk commodities, especially in steel raw materials
Iron ore240
Growth 2000-2009: Iron ore
200
220 1. iron ore: +102.5%2. steam coal: +71.3%3. coking coal: +20.1%4. grains: +18.3%
Steam coal
160
180g
5. bauxite: +3.6%
Grains
Minor bulks
120
140
2001
=100
)
Coking coal Bauxite and phosphate
80
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
inde
x (2
6Source: Clarkson Research Services
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e
Iron ore major players Production China very high, but Fe content extremely poor
1
Fe
Fe content
33%
23
content 56% Fe
content 65%
Major importers:
1) China
2) Japan
3) S. Korea + Germany
Major exporters:
1) Brazil
2) Australia
3) India
Major consumers:
1) China
2) Russia
3) Japan
7
) y ) ) p
Sources: USGS, ABARE, AME
Baltic dry and iron ore price Higher iron ore demand from China and increasing BDI
14.000 250CORRELATION = 0.86
10.000
12.000200
6.000
8.000
100
150
2 000
4.000
50
100
Mt
0
2.000
12/16/2005 12/15/2006 12/14/2007 12/12/2008 12/11/2009
US
D
0 US
D/M
8
BALTIC Dry Iron Ore Spot price (China)
Source: Thomson Financial Datastream
International iron ore trade China iron ore imports keep rising, at the cost of domestic production
70
50
60
30
40
10
20
Mt
0
2007
-01
2007
-03
2007
-05
2007
-07
2007
-09
2007
-11
2008
-01
2008
-03
2008
-05
2008
-07
2008
-09
2008
-11
2009
-01
2009
-03
2009
-05
2009
-07
2009
-09
2009
-11
9
China iron ore imports Australia iron ore exports Brazil iron ore exports
Source: Clarkson Research Services
Coking coal major players
3
China has abundant resources of coking coal, but also many mine accidents
1
3
2Major importers:
1) Japan
2) South Korea
3) India
Major exporters:
1) Australia
2) Indonesia
3) United States
Major consumers:
1) China
2) Japan
3) India + Russia
10
) ) )
Sources: USGS, ABARE, AME, IEA
International coal trade China domestic coal of poor quality, difficult to mine and many small companies
1.680 Importvolumes China:
1 080
1.280
1.480p
- 2008-12: 2.8 Mt- 2009-12: 16.4 Mt- equals: +485.7%
680
880
1.080
80
280
480
2002
-01
2002
-04
2002
-07
2002
-10
2003
-01
2003
-04
2003
-07
2003
-10
2004
-01
2004
-04
2004
-07
2004
-10
2005
-01
2005
-04
2005
-07
2005
-10
2006
-01
2006
-04
2006
-07
2006
-10
2007
-01
2007
-04
2007
-07
2007
-10
2008
-01
2008
-04
2008
-07
2008
-10
2009
-01
2009
-04
2009
-07
2009
-10
2010
-01
11Source: Clarkson Research Services
Coal exports-USA Coal exports-Australia China importvolume
International steel trade
160170140
Extra-regional: China was biggest exporter of steel in 2006, 2007 and 2008; in 2009 Chinese steel exports dropped strongly (position 6)
110120130140150160
0=10
0)
40
60
80
100
120
8090
100110
2000
-01
2001
-01
2002
-01
2003
-01
2004
-01
2005
-01
2006
-01
2007
-01
2008
-01
2009
-01
2010
-01
inde
x (2
000
0
20
40
1992
-01
1993
-01
1994
-01
1995
-01
1996
-01
1997
-01
1998
-01
1999
-01
2000
-01
2001
-01
2002
-01
2003
-01
2004
-01
2005
-01
2006
-01
2007
-01
2008
-01
2009
-01
2 2 2 2 2 2 2 2 2 2 2
Steel Trade Weighted IndexChinese steel production EU-12 steel production World steel production
2009 %-change 2008 2009 %-change 2008
World steel exporters World steel importersJan-Sep (2009 in Mt) Jan-Sep (2009 in Mt)
1. Japan 22.8 -22.0% 1. China 17.1 40.0%2. EU 27 21.7 -17.0% 2. EU 27 15.4 -51.0%3. Russia 20.0 -11.0% 3. S. Korea 13.7 -41.0%4. Ukraine 17.6 -24.0% 4. USA 10.4 -52.0%
12Sources: IISI, ISSB, Clarkson Research Services
5. S. Korea 14.3 -6.0% 5. Turkey 7.4 -33.0%
So, the question is …
What about China?What about China?
13
China’s economic indicators
13.014.2
1012
14CHINA: GDP
6
8
10CHINA: INFLATION
3.8
8.6
2
4
6
8
10
0
2
4
6
02
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
CHINA: IMPORT & EXPORT CHINA: INDUSTRIAL PRODUCTION
y.o.y. %-change-4
-2
2003 2004 2005 2006 2007 2008 2009
y.o.y. %-change
20
40
60
80
15
20
25
-60
-40
-20
0
98 99 00 01 02 03 04 05 06 07 08 090
5
10
y.o.y. %-change y.o.y. %-change
14
98 99 00 01 02 03 04 05 06 07 08 09Export Import 2003 2004 2005 2006 2007 2008 2009
Source: Bloomberg
Investments in China
120
Property construction and investments are likely to remain strong in 2010, judging from newly started projects in recent months
I t t i t ti
80
100
120 Investments in construction, y.o.y. % change
40
60
-20
0
20
-60
-40
20
15Source: NBS, Bloomberg
1/1/2004 1/1/2005 1/1/2006 1/1/2007 1/1/2008 1/1/2009
What does ABN AMRO expect?
The road aheadThe road aheadviews ABN AMRO until 2011
16
Our view on Global Economy
60 15
► Recovery global economy continues, with China leading the way forward- in our base case, inflation remains moderate, on condition that prices for e.g. dry bulk commodities, property and oil do not increase strongly on the medium term
50
60
5
10
15
hang
e
30
40
2006 2007 2008 2009 2010
-5
0
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
010e
011e
y.o.
y. %
-ch
2006 2007 2008 2009 2010VS ISM China PMI Eurozone PMI
2 2
US GDP World GDP Eurozone GDP China GDP
2009 2010 2011 2009 2010 2011GDP Growth (% y.o.y.) Inflation (CPI, % y.o.y. avg)
009 0 0 0 009 0 0 0US -2.4% 3.4% 2.3% -0.3% 1.9% 1.9%China 8.6% 9.4% 9.9% -0.7% 3.0% 3.4%EU -3.8% 1.7% 1.5% 0.3% 1.2% 1.6%W ld
17Sources: Thomson Financial Datastream, Bloomberg, ABN AMRO (forecasts)
World -0.7% 4.0% 4.0% 2.3% 3.4% 0.8%
Our view on China► There are some signs of trouble ahead: e.g. new bubbles (e.g. real estate, stock market) and overheating Chinese economy- however, China is still a developing country and it is far from done growing
South Korea
1.1001.2001.300
a (k
g)
, p g y g g
Taiwan700800900
1.000
n pe
r cap
ita
China
Japan
US
GermanyItaly
France
Canada
300400500600700
onsu
mpt
ion
IndiaBrazil
RussiaUS
Ukraine
France
UK Netherlands
0100200300
stee
l co
18
0 10.000 20.000 30.000 40.000 50.000GDP per capita (USD)
Sources: Worldbank, IISI, ABN AMRO
Our view on Dry bulk► Long term iron ore contracts end in April 2010:- because of high demand, iron ore benchmark price may increase again,
► L t ki l t t h t t
- however, higher contract price iron ore means less (Chinese) demand, which could be some bad news news for capesizers and panamaxen.
► Long term coking coal contracts have yet to start:- expectations on hefty price increase are mounting.
► Market conditions for shipping should improve:pp g p- robust global and Chinese economic growth in 2010/’11
- higher demand for steel (and metal) scrap,
- ongoing urbanization emerging markets,
- recovery real estate markets worldwide,
- strong growth expected in Chinese auto market,
- crude steel utilization ratio still at low levels.
19Sources: Clarkson Research Service, CRU, ABN AMRO
E d f t tiEnd of presentation
F ti d f th i f ti l t tFor question and further information, please contact:Casper BurgeringSenior sector economist Metals & MiningSenior sector economist Metals & Mining
ABN AMRO Group Economics | Sector Researchtel: +31 20 383 26 93e mail casper b rgering@nl abnamro come-mail: [email protected]