DRY BULK AND CONTAINER SHIPPING OUTLOOK World Soda Ash Conference

Transcription

1 SEPTEMBER 2016 DRY BULK AND CONTAINER SHIPPING OUTLOOK World Soda Ash Conference Mario O. Moreno, Senior Economist, IHS Maritime & Trade

2 Agenda Demand/Supply Outlook for Bulk Demand/Supply Outlook for Container Conclusions 2

3 Dry Bulk Bear market to continue for another year 3

4 The era of rapid growth in world trade has ended Global economy will remain stuck in low gear for at least another year. Real GDP and World Trade Exports (%) Real world exports Real world GDP Exports 1% >GDP Global Dry Bulk Trade (Mt) 6,000 5,000 4,000 CAGR 6% CAGR 4% CAGR 2.5% Exports 2.3% >GDP ,000 2,000 1, Dry bulk seaborne trade growth remained stagnant in 2015 y/y. From , bulk trade growth is expected to average 2.5%. 4

5 2016: Bulk Trade Breakdown Steady growth (0.6% y/y) Major Bulks Outlook (Mt) 1,600 1,400 1,200 1, % -1% -3% Iron Ore Coal Grains 29% 8% 35% 28% 2015 Bulk Trade Breakdown ,240Mt Iron ore Coal Grains* 2016 Bulk Trade Breakdown 30% ,262Mt 7% 36% 27% Minor Bulk Iron ore Coal Grains* Minor Bulk 5

6 Global soda ash market enjoys solid demand Top Exporters of Soda Ash (Mt): U.S. China Turkey Rest Global Trade Atlas CAGR : U.S., 3%; China, 7% Top U.S. Ocean Export Markets: 2015 Brazil 21% Indonesia 9% 63% Chile 7% Rest PIERS Top U.S. Ports of Discharge: % Portland 44% Port Arthur 33% Others PIERS 6

7 Mdwt scheduled to be delivered in 2016, but lay-up, slippages and demolitions will soften the fleet growth Dry Bulk Fleet Overview and Outlook (Mdwt) Oderbook Retirement Newbuilding Fcst Deliveries Fleet (RHS) Slippage ~ 55% Demolition ~ 40Mdwt F 2018F Demolition activity is expected to remain at historical level in 2016 Mdwt Orderbook Fleet

8 Cape and Supra will see the biggest net growth in 2016 Dry Bulk Fleet Growth (Mdwt) Capesize Supramax Panamax Handysize +2.0% +1.6% % 0.3% % % % 0.5% % 1.5% F % Fleet +15 years old 15% ~100 Mdwt over 15 years old 85% > 15 years < 15 years Fleet Net Growth (+9Mdwt) Delivered 2016 Demolished Cape Pnmx Supra Handys Total 8

9 Average scrapping age dropped to 26 years in In 2016 we expect a further decrease. Average Demolition Age (years) Handysize Panamax Supramax Capesize Average Age of Fleet (years)

10 12,000 10,000 8,000 6,000 4,000 2,000 0 Supply and demand gap will continue to widen in 2016, thus affecting the freight rate market Supply, Demand & Utilization Rate Gap Supply (Mdwt) Demand (Mdwt) Utilization Rate (%) 87% 85% 83% 81% 79% 77% ~20% surplus capacity 75% BDI 1985 to Source: Baltic Exhange Trade driven by Asian development cycle PEAK TROUGH Gap to continue around 140 Mdwt until 2018, with utilization rates ranging close to 80 s. 10

11 2017 will be a transition year for the dry bulk market Bulk Demand vs Supply (% growth) Demand Growth (%) Supply Growth (%) 25% 15% 5% -5% Prices peaked Supply Surplus Gap starts to narrow Demand Trough Surplus Trough YoY % growth Demand Supply World GDP Exports % 2.0% 2.6% 2.9% % 1.6% 2.1% 2.5% % 1.3% 2.4% 4.0% (avg) 3.1% 1.5% 3.0% 4.2% 11

12 Container shipping Demand is weak, overcapacity persists 12

13 Container trade is growing but at a much slower pace than in the past Global Containerized Exports (millions of TEUs) World Trade Service CAGR 8.1% CAGR 3.0% 2.2% F 13

14 Supply growth will moderate in after record deliveries in 2015 Global supply: fleet and order book (millions of TEUs) Ship deliveries Addition net of scrapping Maritime & Trade fleet capacity forecast F 2017F 14

15 Global TEU capacity growth continues to outpace demand Unlikely return to supply-demand balance during Global supply growth vs. demand growth Global capacity growth Global demand growth 16.2% Maritime & Trade fleet capacity forecast; World Trade Service. 9.4% 8.1% 6.7% 6.1% 5.7% 1.4% 2.3% 6.5% 4.3% 8.2% 1.4% 3.9% 2.2% 5.0% 3.8% F 2017F 15

16 Container shipping market rattled on Hanjin s fallout 2016 most significant year for consolidation in history of container shipping; comes during a year of massive losses for industry and rock-bottom freight rates. Upward near term freight rate impact seen from Aug. 31 Hanjin collapse; roughly half a million TEUs stranded globally on 89 vessels. More carrier consolidation possible; reports surfaced on 9/7 about Maersk interest in acquiring K-Line. Longer term, an increasing likelihood for higher freight rates with fewer, larger market players. 16

17 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 Ocean freight rates rebounding since March, but not without facing headwinds Shanghai Containerized Freight Index ($ per TEU) Weekly, 2016 Jan 1 Sep 9. Source: SSE 1,400 1,200 1, Shanghai-North Europe ($ per TEU) Source: SSE Weekly, 2016 Jan 1 Sep 9. 1/1 3/1 5/1 7/1 9/1 1,400 1,200 1, Shanghai-Mediterranean ($ per TEU) Source: SSE Weekly, 2016 Jan 1 Sep 9. 1/1 3/1 5/1 7/1 9/1 17

18 Conclusions Price recovery in the dry bulk market will be capped until No substitute market to absorb gap caused by China s slowdown, not even India. Minimal ordering and high demolition activity are needed to achieve market equilibrium. Demand-supply imbalance in container shipping will persist during most significant year for consolidation in history of container shipping. Upward near term freight rate impact on Hanjin collapse. Longer term, rates may go higher with fewer, larger market players. 18

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