roads to recovery: comparing and contrasting the outlook for … · 2018-03-21 · roads to...

Roads to Recovery: Comparing and Contrasting the Outlook for Distressed Sectors

Niklas Carlén – Maritime Strategies International (MSI) 18th Annual Marine Money Greek Ship Finance Forum – 11th October 2016

Introduction

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Peak to Trough Comparision:Peak 2006-08 Levels Vs Q2 2016

© Maritime Strategies International !3

-100%

-90%

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Bul

ker

Gen

Car

go

Oil

Tank

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Che

m T

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LNG

LPG

Con

tain

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Car

Car

rier

RoR

o

T/C Rate 5-Yr Old Price

Demand

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Iron Ore:Chinese Imports Growing Despite Stagnant Steel


Chinese Steel Production Chinese Iron Ore Imports

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MnTRest of World IndiaS Africa BrazilAustralia

Forecast

-5%

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45%

-100

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MnT Steel Production Yoy% ChForecast

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Coal:Indian Outlook Shrouded in Uncertainty


Chinese and Indian Coal Imports Coal Seaborne Trade

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MnT China IndiaForecast

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MnT Coking Coal Steam CoalForecast

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Other Bulks:Short-Term Plateau, Medium-Term Growth


Grains+Soya Seaborne Trade Minor Bulks Seaborne Trade

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MnT Soyabean+Meal GrainsForecast

-15%

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YoY % Ch

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TEU Trade and TEU Miles


Asia-Europe isn’t dominant in volume terms, but is in terms of capacity required

0.0

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Asi

a-Eu

rope

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ific

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at. A

m.

intr

a-A

sia

Mn TEU of shipping capacity

Thou

sand

s

Mn TEU of trade

Thou

sand

s

Trade volume

Shipping capacity required (RH Axis)

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Container Demand:2016 Volume Weakness


North-South trades have been the worst affected, but trade disappointing across the board

-8%

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Asi

a-Eu

rope

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spac

ific

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satla

ntic

intr

a-A

sia

intr

a-Eu

rope

Asi

a-La

tin A

mer

ica

Asi

a-M

iddl

e Ea

st/IS

C

Euro

pe-L

atin

Am

eric

a

Oth

er

2016 growth

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Trade Growth is Key to Cascading


• The cascade has currently broken down – four reasons:

➢ Low fuel price ➢ Slow trade growth ➢ Service fragmentation ➢ Alliance reshuffle !

• In our view, trade growth is the most important of these; lines upsized in anticipation of trade growth, when that disappointed then swift ly downsized. !

• Huge supply of spot ships puts lines under no pressure to secure tonnage – can keep flexibility (2-12 month fixtures).

Non-Mainlane East/West Trade

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Dec-13 Dec 14 Dec 15 Aug 16

Headhaul E/W Trade YoY % Ch

Vessel Deployment, k TEU

Thou

sand

s

0.1-2.9k TEU 2.9-5.2k TEU5.2-7.6k TEU 7.6-12k TEU12k TEU+ Demand (RH Axis)

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Container Cascade


Evolution of Asia-Europe Deployment Intra-Asian Deployment

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Mn TEU

12k + TEU 7.6-12k TEU 5.2-7.6k TEU3.9-5.2k TEU 2.9-3.9k TEU 1.3-2.9k TEU

0.0

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Aug2016

Mn TEU7.6-12k TEU 5.2-7.6k TEU 3.9-5.2k TEU2.9-3.9k TEU 1.3-2.9k TEU 0.1-1.3k TEU

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Seaborne Growth Prospects Compared:Dry Bulk Vs Container Trade


0%

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YoY % Ch Container Dry Bulk

Average Annual Trade Growth Over 5-Year Periods (CAGR)

Supply

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Current Orderbook:Sectors Over-Exposed


Required Ships* Vs Orderbook YTD Capacity Adjustment

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Bulker Container

Ships RequiredShips on order

*Required ships to meet incremental demand, irrespective of current over-capacity

Mn

GT

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4

7

Bulker Container

Contracting Scrapping

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Old Tonnage versus Orderbook


Bulk Carriers Containerships

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0.1-2.9kTEU

2.9-5.2kTEU

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12k+TEU

Mn TEU

Over 15 Years Orderbook

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10-40k Dwt 40-65k Dwt 65-120k Dwt 120k+ Dwt

Mn Dwt

Over 15 Years Orderbook

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Help from Unusual Places?

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Imminent Significant (3rd+) Special Surveys


Bulk Carriers Containerships

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Mn Dwt

6th+5th4th3rd% of current fleet (RH Axis)

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2017 2018 2019

Mn TEU6th+5th4th3rd% of current fleet (RH Axis)

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0%

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1991-95 1996-00 2001-05 2006-10 2011-15 2016-20

YoY % Ch Container Dry Bulk

Fleet Growth Compared:Dry Bulk Vs Container Trade


Average Annual Fleet Growth Over 5-Year Periods (CAGR)

Roads to Recovery

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Roads to Recovery:Weighted Average Timecharter Indices Compared


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18020

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T/C Index (2015=100)

Bulker Container

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MSI - FMV


• MSI Forecast Marine eValuator (FMV) is the first web-based tool to provide forecast and historical price data covering virtually all of the deepsea shipping fleet. !

• Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and operating costs for specific vessels. !

• MSI FMV draws on MSI’s proven, proprietary models and a consistent cross-sectional view across all principal shipping sectors. It puts asset values in the context of the near term market to enable reliable benchmarking with outputs based on annual averages. !

• Coverage: !Crude Oil Tanker

Product Oil Tanker

Dry Bulk Carrier

Chemical Tanker

LPG Carrier

LNG Carrier

Multi Purpose

Containership

PCC/PCTC

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http://www.msiltd.com/fmv

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FMV Output


Quarterly Fair Market Value & 1 Year Time Charter Rate (1Q history, current Q, 2Q forecastAnnual average: • Newbuilding contract

price • Fair Market Value • 1 Year Time Charter Rate • Operating Cost 5 years history and 15 years forecast

Price Development Chart detailing forecast price development in relation to historical metrics

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http://www.msiltd.com/fmv

While this document has been prepared, and is presented, in good faith, Maritime Strategies International assumes no responsibility for errors of fact, opinion or market changes, and cannot be held responsible for any losses incurred or action arising as a result of information contained in this document. !The copyright and other intellectual property rights in data, information or advice contained in this document are and will at all times remain the property of Maritime Strategies International.

Disclaimer

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For over 30 years, MSI has developed integrated relationships with a diverse client base of financial institutions, ship owners, shipyards, brokers, investors, insurers and equipment and service providers. !MSI’s expertise covers a broad range of shipping sectors, providing clients with a combination of sector reports, forecasting models, vessel valuations and bespoke consultancy services. !MSI is staffed by economists and scientists offering a structured quantitative perspective to shipping analysis combined with a wide range of industry experience. !MSI balances analytical power with service flexibility, offering a comprehensive support structure and a sound foundation on which to build investment strategies and monitor/assess exposure to market risks.

MSI Background

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6 Baden Place Crosby Row

London SE1 1YW United Kingdom

!Tel: +44 (0)207 940 0070 Fax: +44 (0)207 940 0071

!Email: [email protected]

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roads to recovery: comparing and contrasting the outlook for … · 2018-03-21 · roads to...

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