1. FREIGHT MARKET OUTLOOK
11TH INDIAN COAL MARKETS CONFERENCE
SEPTEMBER 2017

2. PRESENTATION STRUCTURE
current situation
spot rates & futures pricing
positive trade developments in year-to-date, but also re-acceleration in fleet growth
what can sustain market recovery?
potential demand & supply-side drivers
restraining factors
structural risks to trade & the risks posed by surplus shipbuilding capacity
Whilst care and attention has been taken to ensure that the information contained is accurate, it is supplied without guarantee. SSY Consultancy & Research Ltd can accept no responsibility for any errors or omissions or consequences arising therefrom.
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3. COAL VOYAGE RATES TO INDIA
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4. FREIGHT & COMMODITY PRICES
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5. MAJOR DRY BULK & KEY MINOR BULK TRADES BY QUARTER
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6. CHINESE DRY BULK IMPORTS BY CARGO
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7. DRY BULK CARRIER FLEET NET CHANGE: 12 MONTH MOVING AVERAGE
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8. NET FLEET GROWTH IN YEAR TO DATE
8.5 Mdwt +2.7%
5.4 Mdwt +2.8%
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9. PANAMAX 4TC EARNINGS: ACTUAL & FFA
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10. TRANSITION TO DRY BULK MARKET RECOVERY?
any further upside for world steel production?
prospect for increased fronthaul mineral cargoes
Brazilian iron ore/American coal/West African bauxite
government interventions to restrict coal imports (& SE Asian cargo supply)
newbuilding orderbook still at historically low levels…but overhang of surplus shipbuilding capacity
medium term pressures on 20+ year age fleet from new IMO regulations…but delayed implementation of the convention on ballast water management reduces near term demolition prospects
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11. ANNUAL GROWTH IN SEABORNE DRY BULK TRADE: IRON ORE, COAL & GRAINS
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12. DRY BULK CARRIER NET FLEET CHANGE
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13. REGULATORY PRESSURE
implementation of IMO convention on Ballast Water Management postponed until 2019, but US on own schedule
retro-fitting costs and uncertainties over system approvals
global cap on marine bunker fuel sulphur content to be lowered from 3.5% to 0.5% on 1 January 2020 with inflationary implications for freight rates
compliance requires either fuel switching (to ultra low sulphur fuel oil/marine gasoil/gas) or installation of scrubbers
majority of bulk carriers likely to switch fuels rather than retrofit scrubbers (due to capital cost/equipment availability) but more attractive option for larger vessels
uncertainties over implementation/enforcement due to doubts over adequate global supply of low sulphur bunker fuels
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14. DRY BULK CARRIER ORDERBOOK VS OLDER TONNAGE
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15. DRY BULK SHIPBUILDING ACTIVITY BY COUNTRY ACTUAL & ON ORDER
Source: SSY/IHS-Fairplay
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16. CONCLUSIONS
firmer freight rates in the year to date due to improved demand-side fundamentals…with market pricing further rises in the 4q17
market confidence in 2018/19 restrained by uncertain trade outlook, this year’s re-acceleration in fleet supply growth, delays in implementing the IMO convention on BWM and resumption in newbuilding orders
very gradual improvement in underlying fleet utilization anticipated over the next two years, with bouts of spot rate volatility, ahead of potential market disruption from new IMO rules on low sulphur bunker fuels in 2020
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17. London T: +44 20 7977 7404 E: research@ssy.co.uk ssyonline.com
SEPTEMBER 2017