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Shipping & Offshore Research

Global Economy, World Trade & Shipping

Capital Link Shanghai

May 2017

Capital Link Shanghai – DVB Shipping and Offshore Research

The shipping market cycle

All shipping sectors are highly cyclical… but different sectors have different

cycles…

Ship

prices drop

Over ordering by specu-

lators / bargain hunters

Over tonnaging

Freight

rates drop

Demolition

increases

Demand for

newbuildings drops

Excess of shipbuilding

capacity

Yards reopened or new

yards created

Demand for

newbuildings increases

Fleets shrink

Freight rates recover


Shipbuilding Capacity Development

• “Deleveraging” process in Chinese shipbuilding industry

• Korea’s “Big Three” are better off

• Japanese yards are protected by conservative yard capacity management

0.00

10.00

20.00

30.00

40.00

50.00

60.00

197

0

197

2

197

4

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6

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8

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0

201

2

201

4

201

6

201

8 (

f)

Mil

lio

n C

GT

Nominal Capacity - China

Nominal Capacity - South Korea

Nominal Capacity - Japan

Delivery

Source: Clarksons, DVB Shipping and Offshore Research


Shipping – average time to delivery at contracting

0

50

100

150

200

250

Q1

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03 04 05 06 07 08 09 10 11 12 13 14 15 16

15

20

25

30

35

40

45

50

55

No

. o

f V

esse

ls

Ave

. Mon

ths to

De

live

ry

Containership Contracting

Ave. Months to Delivery

Source: Clarksons, DVB Shipping and Offshore Research

0

20

40

60

80

100

120

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03 04 05 06 07 08 09 10 11 12 13 14 15 16

10

15

20

25

30

35

40

45

50

No

. o

f V

esse

ls

Ave

. Mon

ths to

De

live

ry

Crude Tanker


0

50

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150

200

250

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03 04 05 06 07 08 09 10 11 12 13 14 15 16

10

15

20

25

30

35

40

45

50

No.

of V

essels

Ave

. Mon

ths to

De

live

ry

Products Tanker


*Excluding vessels < 10,000 DWT

0

50

100

150

200

250

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350

400

450

500

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03 04 05 06 07 08 09 10 11 12 13 14 15 16

20

25

30

35

40

45

50

No

. o

f V

esse

ls

Ave

. Mon

ths to

De

live

ry

Bulk Carrier Contracting



Seaborne trade

Seaborne trade 2002-2016Sectors not equally exposed to future over-

capacity

[CAGR import volume growth, 2002-2008 ] [Fleet renewal, Orderbook / Fleet (20+)]

Crude oil

Oil products

Container

Dry Bulk

Cars

Total seaborne trade

0%

5%

10%

15%

0% 5% 10% 15%

[CAGR import volume growth, 2010-2016]

Trade growth higher

in 2010-16

than in 2002-08

Trade growth lower

in 2010-16

than in 2002-08

Container

Dry Bulk

Chemical Tankers

LPG

LNG

Car Carriers

Product Tankers

Crude Tankers

0

1

2

3

4

0% 5% 10% 15% 20% 25% 30%

[Orderbook / Fleet]

Sources: IHS Global, MSI and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research


Freight rates are low in most shipping sectors

ClarkSea Index

[USD/Day]

0

10,000

20,000

30,000

40,000

50,000

60,000

ClarkSea Index

Sources: Clarksons SIN and DVB Shipping & Offshore Research

Average 2000-2008

USD 23,444/Day (volatility 11%)

Average 1990-1999


Average 2009-2017



Dry Bulk – Freight rates

Baltic Dry Index

[Index] [Index]

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2,750

3,000

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

Avg 2000-2016 (LHS) 2017 (RHS) 2016 (RHS)

Sources: Clarksons SIN and DVB Shipping & Offshore Research


Dry Bulk – Supply

Orderbook delivery schedule Supply growth expected to slowdown

[Mn dwt]

0

10

20

30

40

2017 2018 2019 2020

Capesize Panamax Supramax Handysize

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

0

100

200

300

400

500

600

700

800

900

Total Fleet Fleet growth (RHS)

[Mn dwt] [Pct.]

Sources: IHS Global and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research


Dry Bulk – Demand

Chinese import demand for major bulk commodities, 2016

Breakdown of Chinese GDP

[Pct. of seaborne imports] [pct. of GDP]

0%

10%

20%

30%

40%

50%

60%

69%

19%

5%

41%

31%

81%

95%

59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Iron ore Coal Grains Total majorDry Bulk

Sources: MSI and DVB Shipping & Offshore Research Sources: IMF and DVB Shipping & Offshore Research


Dry Bulk – Outlook

Seaborne tradeThe demand-supply gap is expected to narrow

over the next years

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Demand-Supply (RHS)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

[Demand – Supply, annual chg.] [Mn tonnes]

Sources: MSI and DVB Shipping & Offshore Research Sources: IHS Global, MSI and DVB Shipping & Offshore Research


Container – Freight rates

Quarterly supply and demand growth Freight rates and time charter rates

[y-o-y, pct.]

30

35

40

45

50

55

60

65

600

800

1,000

1,200

1,400

2013 2014 2015 2016 2017

CCFI (LHS) Clarkson Timecharter Rate Index (RHS)

[Index] [Index]

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Supply growth Demand growth

Sources: IHS Global, Maersk, Alphaliner and DVB Shipping & Offshore Research Sources: Clarksons SIN and DVB Shipping & Offshore Research


Container – Demand

The relationship between GDP growth and container trade growth is changing

[2000 = indexed to 100]

100

150

200

250

300

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

Transport volume in TEU Global GDP

2010-2015

1.2x2000-2008

2.0x

Sources: IHS Global, IMF and DVB Shipping & Offshore Research


Container – Supply

Orderbook delivery schedule Supply growth

[Mn teu]

0.0%

2.5%

5.0%

7.5%

10.0%

12.5%

15.0%

17.5%

0

5

10

15

20

25

Mill

ions

Total Fleet Fleet growth (RHS)

[Mn teu] [Pct.]

0.0

0.5

1.0

1.5

2.0

2017 2018 2019 2020+

New Post-Panamax New Panamax7,000-9,999 teu 3,000-6,999 teuOld Panamax Feeder (0-3000 teu)

Sources: IHS Global and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research


Container – Outlook

Global economic growthIn aggregate, no major improvement in the supply-

demand balance is expected in 2017 and 2018

0%

5%

10%

15%

20%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Supply growth Demand growth

0.0%

2.5%

5.0%

2011 2012 2013 2014 2015 2016 2017 2018

World GDP growth, 2011-2018

0.0%

2.5%

5.0%

2011 2012 2013 2014 2015 2016 2017 2018

Advanced Economies growth, 2011-2018

0.0%

5.0%

10.0%

2011 2012 2013 2014 2015 2016 2017 2018

Emerging Markets GDP growth, 2011-2018

0.0%

5.0%

10.0%

2011 2012 2013 2014 2015 2016 2017 2018

China GDP growth, 2011-2018

Sources: IMF and DVB Shipping & Offshore Research Sources: IHS Global and DVB Shipping & Offshore Research


398

2147

241

117

39

86

949

0

100

200

300

400

500

600

700

800

900

Tonnage ProviderLiner

Liner operated

Idle FleetIdle Fleet

Long-term charters and

charter contracts expiring

2019 and later

Charter contracts

expiring 2017

Charter contracts

expiring 2018

Intransparent

contracts*

* Charter contracts reported valid but not disclosing durations, or disclosing expiration dates lying in the past

Total

5,100 – 9,999 TEU – employment breakdown

Sources: Alphaliner and DVB Shipping & Offshore Research


Structural Trends of Global Energy Market

Market Environment

Source: DVB Shipping and Offshore Research,

Middle East North East Asia

Western EuropeNorth America

Latin America

Shale Gas & Oil Development

Leads to Excess Supply of

Crude Oil, Oil Products,

Chemical Products, LPG and

LNG

Petrochemical

projects may get

reassessed,

delayed or

curtailed

South East Asia & Australia

China’s Slow Down and

China’s Plan to Increase

Self-Sufficiency of

Chemical Products

Petrochemical Capacity

Rationalization is

Delaying Lifting sanction of Iran add

more oil into the market

Increased long-haul trade

of products from new

Middle East refineries

Oil exports to be squeezed

by Middle East exports

towards Far East

Decline of oil production

OECD Europe remains the

main market

China remains to be

the largest buyer for

Crude oil

New Liquefaction Plants

Come on Stream and Start to

Supply LNG

Petrochemical Industry to

Expand to Downstream

Sectors

West Africa

FSU


Disclaimer

This presentation and any information contained herein has been prepared by DVB Bank SE (“DVB”).

The information contained in this presentation is based upon financial and other data which is publicly available or has otherwise been provided to DVB. In

preparing this presentation, DVB has assumed, without any independent verification, the accuracy and completeness of all such information and other

data available from public sources or otherwise provided to DVB. DVB is not responsible whatsoever for any misrepresentations made to it during the

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accepted attestation standards. Accordingly, DVB cannot and does not express an opinion on the information and does not assume any responsibility for

the accuracy or completeness of the information or other data and assessments upon which the presentation is based. A number of assumptions that may

be different from actual events and/or outcomes have been made and changes thereto will have a significant impact on the analyses and valuations that

result there from. DVB accepts no responsibility for the completeness, accuracy or reasonableness of such assumptions.

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interests of any third party in the preparation of this presentation.

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