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Peter Malpas, Braemar Seascope Pty Ltd - Volatility in shipping rates - Will this continue?

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Information about Peter Malpas, Braemar Seascope Pty Ltd - Volatility in shipping rates -...
News & Politics

Published on March 12, 2014

Author: informaoz

Source: slideshare.net

Description

Peter Malpas, Director, Braemar Seascope Pty Ltd delivered this presentation the 2014 AJM Global Iron Ore & Steel Forecast Conference and Exhibition.

The annual AJM Global Iron Ore and Steel Conference is the world's largest gathering of iron ore and steel executives. Over the past 16 years thousands of industry personnel have attended, recognising it as the conference that delivers vital information on the status of the global iron ore and steel sectors.

For more information, visit http://www.globalironore.com.au/home
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Braemar Seascope Global Iron Ore & Steel Forecast Conference AJM Peter Malpas – Braemar Seascope 12th March 2014

Braemar Seascope 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 is specific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Braemar Shipping Services Plc (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 be estimated 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 and external events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such external events have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is an inherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on the information 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 or affiliates 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 without the written permission of Braemar Shipping Services Plc. Braemar Shipping Services Plc accepts no liability to any third parties whatsoever. If permission is granted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context. For more information, please contact Research at research@braemar.com

Braemar Seascope Braemar Shipping Services Plc Shipbroking Dry Cargo Tankers / LNG / FSPO Containers Sale and Purchase New Building Demolition Research Technical Port construction Naval Architecture Vessel & condition surveys Ship construction supervision Environmental Pollution control Incident response Logistics Port Agency Customs clearance Containers

Braemar Seascope Freight Rate Review

Braemar Seascope Record Spot Rates An historical perspective 0 50,000 100,000 150,000 200,000 250,000 US$/Day Capesize Panamax Supramax Handysize Handymax Commencement of Chinese Rapid Development Chinese Credit Crunch Cooling Chinese Steel Demand & Reducing Congestion Record Chinese Iron Ore imports Source: The Baltic Exchange Global Financial Crisis 07/03/2014

Braemar Seascope Spot Rates (1 July 2011 – Present) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 US$/Day Cape Panamax Supramax Handysize Source: The Baltic Exchange 07/03/2014

Braemar Seascope Capesize Volatility (1 July 2011 – Present) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 US$/Day Cape Source: The Baltic Exchange 07/03/2014 c. $120/tonne c. $85/tonne c. $130/tonne

Braemar Seascope Chinese Iron Ore Re-Stocking… Why now?

Braemar Seascope Chinese Iron Ore Stockpiles 50 60 70 80 90 100 110 MillionTonnes 07/03/2014 Source: Braemar Seascope Research

Braemar Seascope Chinese Iron Ore Imports vs. Spot Price Monthly 0 20 40 60 80 100 120 140 160 180 200 0 10 20 30 40 50 60 70 80 90 US$/Tonne MillionTonnes Iron Ore Imports Iron Ore Fines 62% FE spot (CFR Tianjin port) 07/03/2014 Source: Braemar Seascope Research

Braemar Seascope Australian Iron Ore Exports to China 0 5 10 15 20 25 30 35 40 45 50 MillionTonnes 19/02/2014 Source: Braemar Seascope Research

Braemar Seascope Brazilian Iron Ore Exports to China 0 5 10 15 20 25 MillionTonnes 20/02/2014 Source: Braemar Seascope Research

Braemar Seascope Indonesian Mining Ban

Braemar Seascope Impact of Indonesian mining ban 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 US$/Day S2 Aus RV Partial Indonesian Raw Material Export Ban effective 6th May 2012 Total Indonesian Raw Material Export Ban effective 13th Jan 2014 Rapid rise in market prior to the ban followed by market crash Rapid rise in market prior to the ban. Expect to be followed by market crash commencing mid – late December 2013. Source: The Baltic Exchange 19/02/2014

Braemar Seascope Impact of Indonesian mining ban 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 US$/Day S2 Aus RV S2 crash following large volumes of open tonnage out of position in North China and not able to make the voyage back for another cargo. Total Indonesian Raw Material Export Ban came into effect 13th Jan 2014 Source: The Baltic Exchange 07/03/2014

Braemar Seascope Trade Drives Shipping Demand

Braemar Seascope Dry Bulk Trade Growth Iron Ore, Coking & Steam Coal 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 BillionTonnes Iron Ore Coking coal Steam coal 19/02/2014 Source: Braemar Seascope Research

Braemar Seascope Fleet Review

Braemar Seascope 2014 Bulk removals vs. last year 7 12 8 5 8 13 24 8 2 22 2 10 Vessels 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 Small Handysize Large Handysize Handymax Supramax Panamax Post- Panamax Mini Capesize Capesize 2013 vs. 2014 – To Date, DWT Scrapped (m tonnes) 2013 (Same period) 2014 2014 YTD = 2.7m DWT 2013 Total = 21.6m DWT 2012 Total = 36.5m DWT

Braemar Seascope What was ordered in 2013 18 266 2 373 168 11 2 187 0 50 100 150 200 250 300 350 400 Small Handysize Large Handysize Handymax Supramax Panamax Post- Panamax Mini Capesize Capesize NumberofVessels

Braemar Seascope Bulker Fleet & Orderbook 710 1,955 709 1,988 1,890 386 114 1,461 22 413 57 565 374 29 13 309 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 Small Handysize Large Handysize Handymax Supramax Panamax Post- Panamax Mini Capesize Capesize NumberofVessels Fleet Orderbook Total % of fleet on order = 19.3%

Braemar Seascope Capesize (120,000+ DWT) 11 7 20 11 26 38 34 38 46 36 11 26 30 30 20 29 41 47 57 55 43 107 196 211 178 94 19 71 129 105 40 25 50 75 100 125 150 175 200 225 NumberofVessels Fleet Orderbook

Braemar Seascope What has been ordered this year vs. last year 10 55 3 30 43 4 23 1 11 8 57 37 44 0 10 20 30 40 50 60 Small Handysize Large Handysize Handymax Supramax Panamax Post- Panamax Mini Capesize Capesize NumberofVessels 2013 (Same period) 2014

Braemar Seascope Market Outlook

Braemar Seascope Cape Market - the Year Ahead... • Generally the market will be in oversupply but with market volatility driven by the inverse correlation with iron ore prices. • The current recovery in the cape market is being driven by weak iron ore prices – traders taking advantage to further reduce inventory costs & generating import substitution. • Historically, a spike in Q1 is very unusual. • We do not believe this spike will continue in Q2. • However we forecast a further and more sustained recovery in the 2nd half of this year. • Freight will once again become a significant component of the landed cost of iron ore – a rising freight market and a falling fob price for iron ore. 15/11/2013

Braemar Seascope Bulker Delivery Schedule Jan 2011

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