Freight market and coal imports by India 4th International Conference on Coal market in India Nazneen Fatima Sr. Research Analyst 22 August 2014

© Drewry Drewry | 4 th International Conference on coal market in India  Independent commercial maritime consultant  Established in 1970 – experience of four decades  Specialist teams with in- depth knowledge and practical experience  Extensive range of products and services  Client-specific solutions  Global customer base Business Publication Retainers Content Provision Special Products Benchmarking Consultancy Drewry Shipping Consultants: What we offer People you can work with and trust 2

© Drewry Drewry | 4 th International Conference on coal market in India Agenda Dry bulk demand and supply Dry bulk freight market Indian coal demand Conclusion

© Drewry Drewry | 4 th International Conference on coal market in India Global Dry bulk trade and demand for dry bulk fleet Dry bulk fleet supply /demand Coal is the second-largest dry bulk commodity transported via sea Source: Drewry Maritime Advisors Dry bulk trade Dry fleet development

© Drewry Drewry | 4 th International Conference on coal market in India Global dry bulk fleet development VLOC fleet growth Capesize fleet growth Dry bulk fleet growth has declined as compared with 2011 and 2012 amid lower deliveries Total dry bulk fleet is expected to grow around 5% annually in coming five years Capesize fleet growth, which was more than 25% in 2011, has finally come down and expected to decline further by 2019 Post Panamax fleet growth is likely to pick from 2016 onwards Source: Drewry Maritime Advisors Post Panamax fleet growth

© Drewry Drewry | 4 th International Conference on coal market in India Global dry bulk fleet development cont.. Panamax fleet growth Supramax fleet growth Handysize fleet growth Fleet growth of smaller segments such as Supramax and Handysize vessels below 5% Source: Drewry Maritime Advisors Fleet growth rate in smaller segment is on lower side amid low ordering in last couple of years Panamax vessels fleet growth was around 14% during 2012, which has come down and expected to decline significantly by 2016

© Drewry Drewry | 4 th International Conference on coal market in India Dry bulk newbuilding ordering and scheduled deliveries Total dry bulk orderbook VLOC orderbook Capesize orderbook Dry bulk orderbook has declined amid lower orderings in last couple of years Total dry bulk orderbook is around 19% of the existing fleet and 4.6% of orderbook is scheduled for delivery in 2014 The Capesize orderbook is around 18% of the existing fleet, and only 3% of which are scheduled for delivery in 2014 Source: Drewry Maritime Advisors

© Drewry Drewry | 4 th International Conference on coal market in India Dry bulk newbuilding ordering and scheduled deliveries cont.. Post Panamax orderbook Panamax orderbook Handymax orderbook Handysize orderbook Newbuilding ordering is quite low for Post Panamax vessels amid low earnings

© Drewry Drewry | 4 th International Conference on coal market in India Agenda Dry bulk demand and supply Dry bulk freight market Indian coal demand Conclusion

© Drewry Drewry | 4 th International Conference on coal market in India International dry bulk freight market Baltic Dry Index (BDI) Baltic Index: All segments Time charter rate(1year) Dry bulk freight market reached at historical low levels during 2012 The dry bulk fleet grew around15% during 2011and more than 12% during 2012, which increased the supply-demand gap and rates declined significantly Although rates have improved in 2014, the International freight market is still under pressure of over supplied dry bulk vessels Source: Drewry Maritime Advisors

© Drewry Drewry | 4 th International Conference on coal market in India International dry bulk freight market cont.. Capesize Trip rates Supramax Trip rates Panamax Trip rates Handysize Trip rates Capesize trip rates went below the operating cost in 2012 for vessels trading in Singapore- Japan /Australia round voyage Source: Drewry Maritime Advisors

© Drewry Drewry | 4 th International Conference on coal market in India Agenda Dry bulk demand and supply Dry bulk freight market Indian coal demand Conclusion

© Drewry Drewry | 4 th International Conference on coal market in India Coal in energy mix : India India :Share of coal in total energy mix Source: Drewry Maritime Advisors, BP Statistics Global: Share of coal in total energy mix 2013 Electricity Generation ( Terawatt- hours)  Coal, oil and natural gas are the prime energy sources across the globe and in India  Share of coal in energy mix of India is 55%, which is higher than the global share  Major industries for coal consumption are thermal power production, steel manufacturing and cement production  Indian thermal power plants consume more than 70% of the total Indian coal consumption. Coal meets more than 50% Indian energy requirement

© Drewry Drewry | 4 th International Conference on coal market in India Coal consumption and production: India vs. top consumers Growth in coal consumption: India vs. top consumers Growth in coal production: India vs. top consumers Source: Drewry Maritime Advisors, BP Statistics Indian coal consumption has surged in recent years, but its production has stagnated

© Drewry Drewry | 4 th International Conference on coal market in India Coal demand: India Sector wise coal demand: India Steam Coal imports by source: India Coking Coal imports by source: India Thermal coal demand by power producing units are increasing significantly because of an increase in power production capacity and a lack of domestic production to meet the requirement Construction of power projects in coastal areas has made importing coal more economical Indonesia and Australia are the major suppliers of thermal and coking coal to India Source: Drewry Maritime Advisors, Ministry of Coal: India

© Drewry Drewry | 4 th International Conference on coal market in India Coal imports projections and major demand drivers for coal: India Coal imports: India Steel Production: India Thermal power production capacity: India Coal production/consumption gap: India Coal production and consumption gap has nearly doubled in last ten years Source: Drewry Maritime Advisors

© Drewry Drewry | 4 th International Conference on coal market in India Freight rate for importing coal to India Voyage rates for coal imports to India: Panamax Voyage rates for coal imports to India: Capesize Panamax vessels for coal imports in India are more in demand and getting better rates Source: Drewry Maritime Advisors

© Drewry Drewry | 4 th International Conference on coal market in India Indian port infrastructure and vessels at anchorage 18 Largest dry bulk vessels handled at Indian ports Vessels waiting at anchorage at Indian ports Source: Drewry Maritime Advisors, Global ports Dhamra and Gangavaram have the infrastructure to handle vessels with more than 150,000 dwt

© Drewry Drewry | 4 th International Conference on coal market in India Agenda Dry bulk demand and supply Dry bulk freight market Indian coal demand Conclusion

© Drewry Drewry | 4 th International Conference on coal market in India Conclusion ++++ Growth in Indian power generation, steel manufacturing and cement industry Indian investors on the fore in the overseas market Escalating growth in the dry bulk fleet slowed - - Bottlenecks in the supply of domestic coal in India Cement and steel industry established in the inland region have to rely more on the domestic coal in India Newbuilding ordering has picked up recently ++++ Decline in international coal prices Lower ocean freight rates Increasing overseas production capacity - - Huge imports of coal could affect the Indian coal mining industry Supply-demand gap is still on the higher side Pressure on the International ocean freight still exists Freight market and coal imports in India

© Drewry Drewry | 4 th International Conference on coal market in India Drewry was founded in 1970 as a provider of independent information and advice to the global maritime industry. Since then we have worked with over 4,000 clients in more than 100 countries. Singapore Drewry 15 Hoe Chiang Road, #13-02 Tower Fifteen Singapore T: E: London Drewry Christopher Street London EC2A 2BS,United Kingdom T: +44 (0) E: Delhi Drewry 209 Vipul Square, Sushant Lok-1 Gurgaon , India Telephone: /32 E: Shanghai Drewry 555, 5th floor Standard Chartered Tower, 201 Shi Ji Avenue, Pudong District, Shanghai, China T: +86 (0) We are privately owned with research and advisory teams in London, Delhi, Singapore and Shanghai.