Ship Scrapping - Market Pressures IMSF Oslo Foteini Kanellopoulou, Senior Analyst 23 May 212
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2 21 22 23 24 25 26 27 28 29 21 211 212 % y-o-y change Global Economic Outlook 16 14 12 1 8 6 GDP Growth World China India Latin America & Caribs Sub-Sah Africa Distribution of World Economic Growth OECD Non-OECD 1 18% 34% 8 6 4 2 4 82% 66% -2 2-4 2 211 Data source: IMF 23 May 212
198 1985 199 1995 2 25 21 2 22 225 23 Billion people Million people Growing World Population Impact on Energy, Food & Transportation 9 8 7 6 OECD CHINA INDIA OTHER ASIA AFRICA R.O.W 1.3 billion Population Dynamics 212-22 Population % Growth 25 2% 19% 18% 2 16% 14% 5 12% 4 3 1 7% 8% 1% 1% 8% 6% 2 1 5 3% 4% 2% % Data source: US Census Bureau 23 May 212
199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 billion tonnes Growing World Trade Total Seaborne Trade % Trade Growth 2-11 1 Iron Ore Coal Grain Minor Bulk Container Oil Liq Gas Other % 9 8 49%,3 bn tonnes 125% 7 1% 6 5 4 3 2 1 75% 5% 25% % 133% 85% 45% 132% 1% 6% 12% Data Source: Clarksons 23 May 212
Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Index (25=1) Index (25=1) Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Index (25=1) Index (25=1) Commodity Price Indices 25 Industrial Materials Index current 3 Metals Index current 2 1 5 25 2 1 5 2 Food Index current 3 Energy Index current 25 2 1 5 1 5 Data source: IMF 23 May 212
199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 y-o-y % chg. Industrial Production Key Economies USA Europe Japan China India 25 2 1 5-5 -1 - -2-25 Data source: Clarksons 23 May 212
2 21 22 23 24 25 26 27 28 29 21 211 2 21 22 23 24 25 26 27 28 29 21 211 Million tonnes Million tonnes Million tonnes Million tonnes Iron Ore Imports & Steel Production Levels Iron Ore Imports Steel Production 1,2 1, World (RH-axis) S. Korea (LH-axis) Japan (LH-axis) China (LH-axis) 9 75 1,6 1,4 1,2 World (RH-axis) South Korea (LH-axis) Japan (LH-axis) China (LH-axis) 8 7 6 8 6 1, 5 6 45 8 4 4 3 6 3 4 2 2 2 1 Data source: World Steel Association/Clarksons 23 May 212
Million tonnes % share World Steel Scrap for Steelmaking Crude Steel Production Steel Scrap Use Share Scrap Use/Crude Steel Steelworks Purchase of Scrap 1,5 1,2 63. 63.5 63.2 63. 64.2 75 6 9 4.1 4.1 39.9 37.6 37.5 45 6 3 3 26 27 28 29 21 Data source: BIR/Clarksons 23 May 212
1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Now Million gross tonnes All Types* Orderbook Development (>999GT) 4 35 gas carrier 3 25 container ship 2 bulk carrier 1 tanker 5 Data source: Clarksons 23 May 212
% of the existing fleet tonnage capacity Main Sectors Summary Fleet Components Orderbook Built since 2 >yr old 1 8 6 79 81 83 67 78 79 65 4 2 19 13 11 7 11 Crude Tanker Product Tanker Specialised Tanker 29 31 3 25 17 19 2 11 Dry Bulk Containerships LNG LPG Data source: Clarksons 23 May 212
1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212ytd No. of vessels $ per day Fleet Removals* vs. Clarksea Index Crude Tanker Product Tanker Specialised Tanker** Bulker 8 7 6 5 4 3 2 1 Containership LPG LNG Clarksea Index 4, 35, 3, 25, 2,, 1, 5, Note: *includes demolitions, losses & removals ** excludes those in product tanker fleet analysis Data source: Clarksons 23 May 212
1996 1998 2 22 24 26 28 21 212ytd 1996 1998 2 22 24 26 28 21 212ytd 1996 1998 2 22 24 26 28 21 212ytd years of age Removed Fleet Age Profile Evolvement - Tankers Crude Tanker Product Tanker Specialised Tanker Avg. Age Min Age Avg. Age Min Age Avg. Age Min Age 27 24 23yrs old 35 3 28yrs old 3 25 26yrs old 21 18 25 2 2 12 9 1 6 3 1 5 5 Note: Dashed line represents the average age 1996-ytd Data source: Clarksons 23 May 212
1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212ytd 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 years of age years of age 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212ytd 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212ytd years of age years of age Removed Fleet Age Profile Evolvement - Dry & Gas Dry Bulk LPG 4 3 28yrs old Avg. Age Min. Age 4 3 Avg. Age Min Age 3yrs old 2 2 1 1 Containership LNG 4 3 2 1 26yrs old Avg. Age Min Age 5 4 3 2 1 33yrs old Avg. Age Min Age Note: Dashed line represents the average age 1996-ytd Data source: Clarksons 23 May 212
Jan- Jul- Jan-1 Jul-1 Jan-2 Jul-2 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jul-11 $ per tonne $ per barrel Oil Price vs. Bunker Prices 125 1 38cst HSFO Gas Oil Brent Crude Oil Correl (brent, 38cst HSFO) =97% 12 75 9 5 6 25 Correl (brent, 38cst HS) =76% 3 Note: Rotterdam bunker prices Data source: Oceanconnect 23 May 212
Jan-9 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 $ per day $ per day 3, 25, 2, Spot Freight Market 199-1999 2-212ytd Aframax MR P'max Bulker Aframax MR P'max Bulker 9, 8, 7, 6,, 1, 5, 4, 3, 5, 4,526 2, 1, 3,558 Data Source: Clarksons 23 May 212
Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan- Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 $ per day $ million Cross Market Rates vs. Prices Aframax P max Bulker P max Container 1yr TC rate yr old D/H Price 45 5yr old Price Scrap Price 9 9 1yr TC rate yr old Price 5yr old Price Scrap Price 12 5 1yr TC rate yr old Price 5yr old Price 75 4 35 8 7 75 1 4 6 3 25 2 6 5 4 3 6 45 3 8 6 4 3 2 45 3 1 5 2 1 2 1 Data Source: Clarksons 23 May 212
Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 $million yr old vs. Scrap Price Differential Aframax Tanker MR Tanker P max Bulker 35 3 6 3 25 yr old S/H vs. Scrap Price yr old D/H vs. Scrap Price 25 2 5 4 2 3 1 1 2 5 Current 5 1 Data Source: Clarksons 23 May 212
Million dwt Million dwt Million dwt Tanker Orderbook vs. Older Tonnage Crude Tanker Orderbook vs. yr old Fleet Product Tanker Orderbook vs. 2yr old Fleet 9 75 6 45 3 2 1 5 6. 5. 4. 3. 2. 1.. Specialised* Tanker Orderbook vs. 2yr old Fleet Data source: Clarksons *including IMO vessels in the product tanker fleet 23 May 212
Million teu Million cbm Million dwt Million cbm Dry & Gas Carrier Orderbook vs. Older Tonnage Dry Bulk Orderbook vs. 2yr old Fleet LPG Orderbook vs. 25yr old Fleet 2 1 5 2.5 2. 1.5 1..5. 4. Containership Orderbook vs. 2yr old Fleet 12 LNG Orderbook vs. 3yr old Fleet 3. 9 2. 6 1. 3. Data source: Clarksons 23 May 212
Concerns when operating old tonnage Voyage Expenses Operating Expenses Drydocking Costs New Technology Fuel Efficiency ECA Requirements Ballast Water Emissions and other environmental issues 23 May 212
Thanks for your attention! 23 May 212