www.braemaracm.com The Dry Bulk Shipping Market Panel Discussion Global Iron Ore & Steel Forecast Conference 2017 Peter Malpas 30 th March 2017
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The Dry Bulk Shipping MarketPanel Discussion
Global Iron Ore & Steel Forecast Conference 2017
Peter Malpas30th March 2017
www.braemaracm.com
Disclaimer
The information contained within this report is given in good faith based on the current market situation at the time of preparing this report and as such isspecific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Braemar Shipping ServicesPlc (and all associated and affiliated companies) does not accept any liability whatsoever for any errors of fact or opinion based on such facts.
Some industry information relating to the shipping industry can be difficult to find or establish. Some data may not be available and may need to beestimated or assessed and where such data may be limited or unavailable subjective assessment may have to be used.
No market analysis can guarantee accuracy. The usual fundamentals may not always govern the markets, for example psychology, market cycles andexternal events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such externalevents have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is aninherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on theinformation contained in this report.
All information provided by Braemar Shipping Services Plc is without any guarantee whatsoever. Braemar Shipping Services Plc or any of its subsidiaries oraffiliates will not be liable for any consequences thereof.
This report is intended solely for the information of the email recipient account and must not be passed or divulged to any third parties whatsoever withoutthe written permission of Braemar Shipping Services Plc. Braemar Shipping Services Plc accepts no liability to any third parties whatsoever. If permission isgranted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.
For more information, contact Research at [email protected]
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1. What was behind the recent spike in the shipping markets?
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Record Spot RatesAn historical perspective
0
50,000
100,000
150,000
200,000
250,000
US
$/
Day
Capesize
Commencement
of Oversupply
Recovery?
Commencement
of Chinese
Rapid
Development
Chinese Credit
Crunch
Cooling
Chinese Steel
Demand &
Reducing
Congestion
Record Chinese
Iron Ore imports
Global
Financial
Crisis
21/03/2017
Source: The Baltic Exchange
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Spot Rates(1 July 2015 – Present)
0
5,000
10,000
15,000
20,000
25,000
US
$/
Day
Cape Capesize 2014 (May) Approx Opex
23/03/17
Source: The Baltic Exchange
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Capesize Supply:Demand (Annual)
80
130
180
230
280
330
Mill
ion
dw
t/Ye
ar
DemandSupply
Source:BraemarACMResearch
01/03/2017
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Bunker & Crude Oil Prices2014 - YTD
20
40
60
80
100
120
140
0
100
200
300
400
500
600
700
$/B
arrel$/T
on
ne
Singapore 380 CST (LH axis) Crude Spot (RH axis)
24/03/2017
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Cape Spot Rates – Fronthaul vs Aussie RVVoyage Charter
0
2
4
6
8
10
12
14
16
18
US
$/
Ton
ne
C3 - Fronthaul C5 - Pacific RV
20th March 2017Braz/China = $16.70W Aus/China = $6.93
Diff = $9.77
Source: The Baltic Exchange
23/03/2017
1st March 2016Braz/China = $5.51
W Aus/China = $2.94Diff = $2.57
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2. How will future fleet development impact iron ore producers?
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Capesize Fleet & Orderbook
130
1,079
244210
128 44 62
0
200
400
600
800
1,000
1,200
Mini Cape Standard Capesize Large Capesize VLOC
Nu
mb
er o
f Sh
ips
Fleet OrderbookSource: Braemar ACM Research
01/03/2017
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Standard Capesize130,000-199,999 DWT
3 3 4 7 8 4 9 4
13
23 20 19
27
34
37
47 3
5 28
89
17
6
17
5
10
9
34
46
51
66
81
8
9 10
25
50
75
100
125
150
175
200
Nu
mb
er o
f Sh
ips
Fleet Orderbook
Source: Braemar ACM Research
01/03/2017
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Large Capesize200,000+ DWT, iron ore and coal
2 1 1 2
5
10 9
17
8 6 7
13
33
37
27
22
30
14
25
10 8
1 10
10
20
30
40
50
Nu
mb
er
of
Ship
s
Fleet Orderbook
Source: Braemar ACM Research
01/03/2017
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VLOC 200,000+ DWT, iron ore only
7
9
16
11 9
1 2 1 1 2 1
3
7
12
15
23
36
23
13
9
6
31
6
17
24
5
0
5
10
15
20
25
30
35
40
Nu
mb
er
of
Ship
s
Fleet Orderbook
Source: Braemar ACM Research
01/03/2017
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Ballast Water Management Legislation
– The BWM Convention requires ships to manage their ballast water to help prevent the spread of invasive aquatic species which can harm local ecosystems.
– The International Convention for the Control and Management of Ships' Ballast Water and Sediments (BWM Convention) will enter into force on 8 September 2017.
– This is exactly one year after Finland’s accession of the convention last month and so reaching the necessary percentage of the world’s fleet to trigger the implementation date of the convention.
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3. When will Charterers see a rise in their shipping costs?
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Capesize Supply:Demand (Annual)
80
130
180
230
280
330
380
Mill
ion
dw
t/Ye
ar
Demand
Supply
Source:BraemarACMResearch
01/03/2017
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Capesize Annual Utilisation
70%
75%
80%
85%
90%
95%
100%
% U
tilis
atio
n
Source: Braemar ACM Research
01/03/2017
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Bulker Delivery Schedule
Jan 2011
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