Punit Oza - Dry Freight Markets

Dry Bulk Market – Rough Seas Ahead10th March 2016Punit OzaVice President, Torvald Klaveness

Cape earnings and forward curves

Source:Klaveness Research

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-170

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Cal 15 = 12,775 Cal 16 = 12,900 Cal 17 = 13,800

Cal 15 Actual = 6,900 Cal 16 = 4,600 Cal 17= 6,750

C4TC C4TC Forward 02.12.2014 C4TC Forward 25.02.16

Panamax earnings and forward curves


Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-170

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Cal 15 = 12,775 Cal 16 = 12,900 Cal 17 = 13,800

Cal 15 Actual = 5,500 Cal 16 = 4,300 Cal 17= 5,200

P4TC P4TC Forward 02.12.2014 P4TC Forward 25.02.16

Supramax earnings and forward curves


Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-172,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Cal 15 = 8,800 Cal 16 = 8,900 Cal 17 = 9,200

Cal 15 Actual = 6,900Cal 16 = 4,700 Cal 17 = 5,300

S6TC S6TC Forward 02.12.2014 S6TC Forward 27.11.15

The lowest % fleet growth since 2003…

Source:Klaveness Research/Clarksons

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015200

300

400

500

600

700

800

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

4.6% +5.0 %

+3.0%

Total Dry Bulk Fleet Growth<<Mdwt YoY Growth>>

Mdw

t

… is not enough when demand growth is zero

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20151,800

2,300

2,800

3,300

3,800

4,300

4,800

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

+4.8%

0.0%

Total Dry Bulk Trade Growth<<Million tonnes YoY Growth>>

Mill

ion

tonn

es

Iron Ore

Iron ore is the largest drybulk commodity…


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015100,000,000

300,000,000

500,000,000

700,000,000

900,000,000

1,100,000,000

1,300,000,000

1,500,000,000Global Iron Ore Export

Mill

ion

tonn

es

Iron Ore 1386 Mt30 %

Coal 1 197 Mt 25 %

Grains 659 Mt

14 %

Minor Bulks 1 453 Mt

31 %

2015 Seaborne Volumes

…this year’s trade growth is the slowest in our timeseries

Source:Klaveness Research/GTT

Global steel production is historically closely correlated to GDP growth…

Source:Klaveness Research/Worldsteel

19801982

19841986

19881990

19921994

19961998

20002002

20042006

20082010

20122014

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Global Steel Production

-100% 0% 100% 200% 300% 400% 500% 600% 700%-10%

-5%

0%

5%

10%

15%

20%

f(x) = 0.0351694335793578 x − 0.0972863251357484R² = 0.741162915943535

Global Steel Production and GDP growth

GDP Growth

Stee

l Pro

ducti

on G

row

th

0% 100% 200% 300% 400% 500% 600%-10%

-5%

0%

5%

10%

15%

20%

2014

2015

R² = 0.725322388710269

Global Steel Production and GDP growth

GDP Growth

Stee

l Pro

ducti

on G

row

th

…but steel production in 2015 is well below trend and down 2.9% Y..

Source: Klaveness Research/Worldsteel/IMF

…as China’s steel production stalls…

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500

600

700

800

900

-5%

0%

5%

10%

15%

20%

25%

30%

35%

29.6 %

18.7 %16.8 %

2.2 %

14.7 %

9.3 % 9.0 %

4.9 %

13.8 %

0.5 %

-2.4 %

Chinese Steel ProductionChina YoY Growth>>

Source:Klaveness Research/Worldsteel

…but Chinese steel consumption has fallen more than production…

Source:Klaveness Research/NBS China/Mysteel/CISA

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 20040

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

Chinese Steel Export (YTD Oct)

…Excessive Chinese Steel production is exported…

Jan Mar Apr May Jun Jul Aug Sep Oct Nov Dec50,000,000

52,000,000

54,000,000

56,000,000

58,000,000

60,000,000

62,000,000

64,000,000

66,000,000

68,000,000

China Real Steel Consumption

Range 13-14 2013 2014 2015

-5.8% YoY


+32%+20%

Source:Klaveness Research/Clarksons/Worldsteel

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100

200

300

400

500

600

700

800

900

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2.8 % 2.3 % 3.3 %

-2.0 %

-21.2 %

21.5 %

3.8 %

0.4 %

-3.8 %

0.4 %

-3.5 %

ROW Steel Production

EU -15 Japan USA India KoreaRussia Turkey Brazil Taiwan MexicoIran Other YoY Growth>>

..leading to negative growth also in ROW production…

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500

600

700

800

900

1000

-30%

-20%

-10%

0%

10%

20%

30%

3.6 % 5.0 % 5.4 %

-2.2 %

-23.7 %

23.3 %

4.4 %1.1 %

-2.8 %

4.0 %

-1.1 %

ROW Steel Production + Chinese Steel Export<<ROW Steel Production <<Chinese Export YoY Growth>>

…which would have been less negative without Chinese exports

Source: Klaveness Research/Worldsteel/GTT

In the short/medium term global steel production is totally dependant on China

Source:Klaveness Research/Clarksons/Worldsteel

China

51%

EU -159%

Japan7%

USA5%

India5%

Korea4%

Russia4%

Turkey2%

Brazil2%

Taiwan1%

Mexico1% Iran

1%Other

7%

2015 Steel Production

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

200

400

600

800

1,000

1,200

1,400

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

Global Iron Ore importsChina ROW China Market Share>>


…50% of Chinese steel production is directly linked to real estate…

Source:JP Morgan, Wood Mackenzie/Klaveness Research

Construction res-idential

21%

Construc-tion non-

residential29%

Machinery18%

Infrastructure14%

Transport11%

Household appliances3%

Other4%

China Steel Demand by end use - 2015E

…China used more concrete in 2011-2013

Source: Gatesnotes, USGS, Cement Statistics, Mineral Industry of China 1990-2013/forbes

than the U.S. did in the 20th century!...

2013 2014 20150

5

10

15

20

25

YTD FAI y/y: China

Total Real Estate

… and real estate is where we have seen growth slow down the mostConcrete consumption

Source:NBS China/Klaveness Research

Source:Clarksons/Klaveness Research

Jul-11Sep

-11

Nov-11Jan

-12

Mar-12

May-12

Jul-12Sep

-12

Nov-12Jan

-13

Mar-13

May-13

Jul-13Sep

-13

Nov-13Jan

-14

Mar-14

May-14

Jul-14Sep

-14

Nov-14Jan

-15

Mar-15

May-15

Jul-15Sep

-15

Nov-15Jan

-16-1.4 %

-0.9 %

-0.4 %

0.1 %

0.6 %

1.1 %

1.6 %

2.1 %

2.6 %

3.1 %

Average House Prices per Tier - MoM Change

Tier 1 Tier 2Tier 3 and lower

We see some green shoots..…housing sales have rebounded…

Source: Reuters Datastream/Klaveness Research Source: Reuters Datastream/Klaveness Research

… and house prices are rising in Tier 1 and Tier 3 cities and stabilizing in Tier 2

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

120,000,000

130,000,000

140,000,000

China: Floor Space of houses sold (3mma)

Range 2010-14 2014 2015


60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

China: Floor Space of houses newly started

Range 2010-14 2013 2014 2015

…and inventory of unsold buildings has stabilized……but house starts have not yet recovered...

Source: Reuters Datastream/Klaveness Research

Feb-09Apr-0

9Jul-0

9Oct-

09Jan-10

Mar-10Jun-10

Sep-10

Dec-10

Feb-11

May-11

Aug-11

Nov-11Jan-12

Apr-12Jul-1

2Oct-

12

Dec-12

Mar-13Jun-13

Sep-13

Dec-13

Feb-14

May-14

Aug-14

Nov-14Jan-15

Apr-15Jul-1

5Oct-

150

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Unsold Sqm

Tier 1 Tier 2 Tier 3

...except of the September blip

Source: NBS China/Klaveness Research

Even though Chinese steel production growth is negative YTD…

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec110

120

130

140

150

160

170

IO and Steel Inventories China

Range 12-15 2014 2015 2016

MT

Iron

Ore

Equ

ival

ents

Source: Klaveness Research ,Clarksons, WorldSteel Source: Klaveness Reserach, Mysteel, CISA

…and despite inventory destocking..

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500

600

700

800

900

-5%

0%

5%

10%

15%

20%

25%

30%

35%

29.6 %

18.7 %16.8 %

2.2 %

14.7 %

9.3 % 9.0 %

4.9 %

13.8 %

0.5 %

-2.4 %

Chinese Steel ProductionChina YoY Growth>>

…Chinese Iron Ore imports are flat YoY……as Chinese domestic iron ore production has been displaced...

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

Chinese Iron Ore Imports

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

China Implied Domestic IO Consumption (3mma)

Range 13-14 2013 2014 2015

Source:Klaveness Research/GTT Source:Klaveness Research/NBS China/Mysteel/CISA

2013 2014 2015 2016 2017 2018 20190

200

400

600

800

1000

1200

1400

1600

Export Capacity from Majors

Vale Rio Tinto BHP Fortescue Anglo Roy Hill

… with low cost production from the majors..

Source:Klaveness Research/JP Morgan/Company Data Source:Klaveness Research/GTT

… which also has displaced marginal seaborne producers

Jan-13

Mar-13

May-13

Jul-13Sep

-13

Nov-13Jan

-14

Mar-14

May-14

Jul-14Sep

-14

Nov-14Jan

-15

Mar-15

May-15

Jul-15Sep

-15

Nov-15Jan

-16350000000

400000000

450000000

500000000

550000000

600000000

650000000

90000000

110000000

130000000

150000000

170000000

190000000

210000000

230000000

250000000

270000000

290000000

Chinese Iron Ore Imports (mtpa, 3mma)

Australia<< Brazil+South Africa>> Other>>


Coal is the second biggest Dry Bulk Commodity…… and was down 7% in 2015


Steam Coal1 002Mt

Coking Coal; 262Mt

2007 2008 2009 2010 2011 2012 2013 2014 2015 -

200000 000

400000 000

600000 000

800000 000

1000000 000

1200000 000

1400000 000

-10.0 %

-5.0 %

0.0 %

5.0 %

10.0 %

15.0 %

0.0 %

3.9 %

0.9 %

10.5 %

9.0 %

12.4 %

8.0 %

0.6 %

-7.4 %

Global coal importsChina India Stable AsiaUK EU (ex UK) Emerging Asia

…as a rapid fall in Chinese imports… …and in U.K. imports…

2007 2008 2009 2010 2011 2012 2013 2014 20150

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

Chinese Seaborne Coal imports 2015

2007 2008 2009 2010 2011 2012 2013 2014 201510,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

UK Coal Imports 2015

-87Mt

-17Mt

Source:Klaveness Research/GTT Source:Klaveness Research/GTT

…overshadows healthy growth in India...…and steady growth in the ROW


2007 2008 2009 2010 2011 2012 2013 2014 2015 -

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

India Coal imports (YTD Sep)

+6 Mt

2007 2008 2009 2010 2011 2012 2013 2014 2015400,000,000

450,000,000

500,000,000

550,000,000

600,000,000

650,000,000

700,000,000

750,000,000

ROW imports (YTD Sep)

The largest export cuts is in Indonesia…

2007 2008 2009 2010 2011 2012 2013 2014 2015100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

200,000,000

220,000,000

240,000,000

260,000,000

280,000,000

300,000,000

Indonesian Export (YTD Sep)

2007 2008 2009 2010 2011 2012 2013 2014 20150

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

North American Exports (YTD Sep)

USA Canada

…and North America

-41 Mt

-19 Mt


Have Chinese seaborne coal imports found a floor?

Source:Klaveness Research/GTT *Excluding imports from Mongolia (railed) and imports from North Korea (carried in shortsea vessels)


10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

China Seaborne Coal Imports*

range 2011-2015 2014 2015 2015 Avg 2016

Chinese Coal Imports is only a fraction of domestic production…

Chinese Power Plant Projects, #

4%

5%

7%

6%

8%

7%

Source:Klaveness Research, China NBS/GTT Source:Global Coal Plant Tracker

…and there are still many coal fired power plants being built

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

500

1000

1500

2000

2500

3000

3500

4000

4500

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%China Coal Production China Coal Import Imports (% of production)

Chinese coal import vs. domestic production

It is not only imports that are falling…

Source: Klaveness Research/China NBS

2011 2012 2013 2014 20153,400

3,500

3,600

3,700

3,800

3,900

4,000

4,100

China: Raw Coal Output 2015

Mill

ion

tonn

es

-5%

2011 2012 2013 2014 20151800

1900

2000

2100

2200

2300

2400China: Coal Transported by rail 2015

Mill

ion

tonn

es

-12%

…Raw coal output is down 5%…and coal transported by rail is down 12%

Source: Klaveness Research/China NBS

29

Indian coal imports was up a massive 30% YoY in FH-15……but is down YoY in SH…



10,000,000

15,000,000

20,000,000

25,000,000

Range 2012-2015 2015 2014

India: Coal Imports

India Coal Import...but what about domestic production?

Source:Klaveness Research/Coal India

… as Coal India’s production is up 9% April to October……and total Indian production up about 7.5%

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-200

100

200

300

400

500

600

700

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Coal Production IndiaCIL SCCL Private YoY Growth>>

Mill

ion

tonn

es

…and as Indian power plants has turned restocking into destocking..

Source:Klaveness Research/India Central Electricity Authority

1 2 3 4 5 6 7 8 9 10 11 124

9

14

19

24

29

Indian Coal Stocks (days)Range 11-14 2014 2015 2016

India Power Plant Projects, #

India’s coal consumption has grown faster than production……we are confident than India’s coal consumption will continue to grow…

Source: Klaveness Research/Coal India Source:Global Coal Plant Tracker

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-150

100

200

300

400

500

600

700

800

900

5%

10%

15%

20%

25%

30%Domestic Coal Production Coal Import Import Percentage>>

Mill

ion

Tonn

esIndia's Coal Consumption by source

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-200

200

400

600

800

1000

1200

1400

1600

Coal Production IndiaCIL SCCL Private

India Coal Import...but what about domestic production?

Source:Klaveness Research/Coal India/News articles

CAGR=6.8%CAGR=1.6%

+6.0%

CAGR=20%???

…but how fast will domestic production grow going forward?

YTD+ 10%

… but current production growth is probably enough to cover demand growth… the governments 2020 production forecast is too ambitious…

34

South East Asia is coming from a low base import volume but is expected to grow considerably over the next 5 years

South East Asian Power Plant Projects, #

Source:Klaveness Research/News articles Source:Global Coal Plant Tracker

2015 2016 2017 2018 2019 20200

20

40

60

80

100

120

Emerging Pacific Expansions

Vietnam Malaysia Phllippines Pakistan

Mill

ion

tonn

es

35

Turkey have plans to quadruple their import based on new coal fired capacity

Turkish Power Plant Projects, MW

Source: Klaveness Research /GTT

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202010,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

55,000,000

60,000,000

Turkey Coal Import

Base Case, CAGR = +10%

Source: Klaveness Research/Yildirim Group

Grains and Oilseeds

Source: Klaveness Research/GTT/Various port data

The Grain and Oilseed trade constituted 14% of 2014 volumes


2012 2013 2014 2015 Est0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

500,000,000

Grain Export from Atlantic HubsSouth America U.S. Black Sea EU

… Grain trade in 2015 at all time high

+39Mt

…a prolonged and all time high ECSA grain season...

1 2 3 4 5 6 7 8 9 10 11 126,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

22,000,000

24,000,000

ECSA Grain Export (Port data)

Range 12-14 2014 2015 Actual2015 Estimate 2016


6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

US Grain ExportRange 2010-2014 2014 2015 2015 Estimate2016 Projection

Source:Klaveness Research/GTT/USDA Source:Klaveness Research/GTT/USDA

…has displaced U.S. export in Q4...and pushed some of it to Q1-16???...together with prospects of a new all time high ECSA export season... ...grain shipments are expected to be very strong in FH-16...

As the major exporters are in the Atlantic…and majority of imports are in the Pacific.....the grain trade generates a lot of ton mile

Source:Klaveness Research/USDA

176Mt

41 71Mt

174Mt

25

105Mt

87Mt

47

105Mt46

27

23

China Thermal Coal Import- Power output growth continued to slow in Q1…- …and hydro production growth continued to post YoY growth…

Source:Klaveness Research/USDA

Long term trend: USDA forecast a low but steady growth in the next 10 yearsExport will grow from Atlantic HubsImport will grow in China and emerging economies

Export Import-20

-15

-10

-5

0

5

Export Import-40

-35

-30

-25

-20

-15

-10

-5

0

Export Import-202468

10

Export Import-4-202468

10

Export Import-14-12-10

-8-6-4-20

Export Import-15-10

-505

1015202530

Export Import-10

0

10

20

30

40

50

60

Export Import-10

-8-6-4-20

China Thermal Coal Import- Power output growth continued to slow in Q1…- …and hydro production growth continued to post YoY growth…


Short term:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec1,410,000.0

2,410,000.0

3,410,000.0

4,410,000.0

5,410,000.0

6,410,000.0

7,410,000.0

China Grain import

Range 12-14 2014 2015 2016

Minor Bulks

Minor bulks constitutes 29% of Dry Bulk Volumes


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FC 800

900

1,000

1,100

1,200

1,300

1,400

Total Minor Bulk Trade

Mill

ion

tonn

es

Chinese minor bulks imports are up YoY…up 17% YoY in the last 8 months


2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

Chinese Minor Bulk Import (YTD Oct)

Nickel Ore Bauxite Pulp Fertilizers Steel Scrap

Alumina Manganese Ore Chromium Ore Copper Concentrates Petcoke


12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

22,000,000

24,000,000

26,000,000

Chinese Minor Bulk ImportRange 11-14 2013 2014 2015

-39% YoY +17% YoY


Fleet Growth

Total Dry Bulk Fleet Growth- Lowest since 2003


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-60

-40

-20

0

20

40

60

80

100

120

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2.3 %

4.2 %

3.2 %

2.1 %

4.6 %

7.2 % 6.9 %

6.6 %

6.7 %

7.6 %

14.7 %15.7 %

13.8 %

7.2 %

5.0 %

3.0 %2.1 % 2.0 %

Total dry bulk fleet growth

Deliveries Scrapping Additions/Removals YoY growth

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-20

-10

0

10

20

30

40

50

60

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

3.7 %

5.1 %

3.1 % 3.2 %

7.2 %

9.5 % 8.8 % 8.8 % 8.3 %

13.3 %

22.5 %

20.4 %

16.9 %

7.1 %

4.7 % 1.9 %0.6 %

0.2 %

Deliveries Scrapping Additions/Removals yoy fleet growth >>

Mdw

tCapesize Fleet Growth- Lowest since 2003


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-10

-5

0

5

10

15

20

25

30

-5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

5.6 %

9.2 %

5.5 %

1.6 %

4.7 %

8.3 %8.7 %

7.2 %6.0 %

5.1 %

9.0 %

12.3 %

13.5 %

9.7 %

7.1 %

2.6 %

1.3 %

-1.0 %


Mdw

tPanamax Fleet Growth- Lowest since 2003


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-5

0

5

10

15

20

25

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1.7 %

6.1 %

8.5 %6.5 %

5.9 %

8.4 % 8.2 %7.2 %

8.3 %

9.3 %

16.3 %

18.7 %15.4 %

9.1 %

5.8 %

6.6 %

6.2 % 5.6 %


Mdw

tSupramax Fleet Growth- Continued high fleet growth


Handysize Fleet Growth- Slightly higher, but remains fairly low

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-10

-5

0

5

10

15

-6%

-4%

-2%

0%

2%

4%

6%

8%

-1.7 %

-2.4 % -2.6 %

-1.8 %

0.3 %1.6 % 0.8 %

1.9 %

3.4 %

-0.5 %

6.1 % 6.1 % 3.6 %

-0.1 %

0.6 %

0.7 %2.3 % 2.0 %


Mdw

t


Q1-00Q3-00

Q1-01Q3-01

Q1-02Q3-02

Q1-03Q3-03

Q1-04Q3-04

Q1-05Q3-05

Q1-06Q3-06

Q1-07Q3-07

Q1-08Q3-08

Q1-09Q3-09

Q1-10Q3-10

Q1-11Q3-11

Q1-12Q3-12

Q1-13Q3-13

Q1-14Q3-14

Q1-15Q3-15

9

10

11

12

13

14

15

Optimal Speed Panamax Actual Speed

Knot

s

53

Effective supply growth dependant on speed- Short term demand shocks can be met by speed increases


Supply increaseof 16%

Conlusions

• xxxx

Conclusions

Conlusions

• Chinese real estate market the main driver for iron ore imports If the house prices keep rising and destocking of housing continues, new activity

may follow.

• Chinese coal import policies and Indian domestic coal production the main drivers for coal trade

We think Chinese coal imports bottomed out in 2015 and expect it to stagnate during 2016 and thereafter grow at a moderate pace as domestic output reduces.

We think that demand growth will eventually outperform production growth in India and expect imports to stagnate/reduce during 2016 and thereafter grow at a steady pace.

• We expect all time high grain/oilseed trade in 15/16 Marketing Year and steady growth thereafter.

• We expect a steady growth in Minor Bulks trade and shifting trade patterns

• Earnings will be rangebound over 2016 as supply is elastic to demand through: Speed optimalization Scrapping/Slippage/Cancellations Newbuildings

Conlusions

• Shipping as well as Commodities move in Cycles

• 2003 to 2008 period was an exceptional period and an aberration

• As it stands today, both shipping and commodities are back to moving in cycles

• Historically, the low prices of commodities and low shipping costs should spur new trades and boost existing trades as well.

• China remains a huge influence due to its sheer size, even if in a subdued form.

• Due to the technological advances and economic interdependence, there is a massive intent among countries, especially in Asia, to promote trade and stimulate demand.

• Geo political uncertainties have brought together unlikely allies and therefore the possibility of new trades and deals.

4%

5%

7%

6%

8%

7%

Punit Oza - Dry Freight Markets

Business

Transcript of Punit Oza - Dry Freight Markets