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Slide 1
CHEMICAL TANKERS DAWN OF NEW U.S. & MIDDLE EAST LONG HAUL TRADES MARINE MONEY The Pierre NEW YORK 17th June 2015
Steve Christy Head of Research
Navig8 Group
Slide 2
IDENTIFYING THE HYDROCARBON STRUCTURAL CHANGES
LPG US Fracking (Gas) Associated LPG Production=Exports to Asia 2013
Crude Oil US Fracking (Crude) ‘Surplus’ Atlantic Basin Crude Going to Asia 2014 New OPEC Policy More than Expected Mid East Crude 2015 Lower Oil Prices Stronger Growth in World Oil Demand 2015
Oil Products Strategic Investment in Mid East Refining 2014/17 US Refiners Cost Advantage = More Products Exports Since 2011/12 US Condensate Exports = More Trade from US 2014/15 Lower Oil Prices = Stronger Growth in World Oil Demand 2015
WHAT IS HAPPENING IN CHEMICALS?
Slide 3
Petchem feedstock price advantages
Gas Price & Naphtha Indications Worldwide $ per million btu
10 8
3
1
13 12
NAP
HTH
A
GAS
GAS
GAS
GAS
NAP
HTH
A
EUROPE ASIA
MID EAST
USA MAIN
DEMAND GROWTH
Slide 4
Abundant & More US Gas Supplies
60
65
70
75
80
85
Jan
Apr
Jul
Oct Jan
Apr
Jul
Oct Jan
Apr
Jul
Oct Jan
Apr
Jul
Oct Jan
Apr
Jul
Oct Jan
Apr
Jul
Oct
2011 2012 2013 2014 2015 2016
Changing US Gas Production Forecasts (EIA) billion cubic feet/day
Jan 2012 Forecast Jan 2013 Forecast
Jan 2015 Forecast
Jan 2014 Forecast
Apr 2015 Forecast May 2015 Forecast
May 2014 Forecast
Slide 5
Huge Investments in US Methanol Capacity
5.4
1.8 1.8
5.4
1.8
7.2
1.0
3.1
TOTAL 11.3
4.8 2.8
1.1
TOTAL 8.8
Texas Projects City YearCapacity,
million mt/yearLyondellBasell Channelview 2014 0.8OCI Beaumont Beaumont 2015 0.2Celanese Clear Lake 2015 1.3OCI Beaumont Beaumont 2016 1.8Fund Connell USA Energy Texas City 2019 3.6Fund Connell USA Energy Texas City 2020 3.6
Louisiana Projects City YearCapacity,
million mt/yearG2X Energy Lake Charles 2015 0.1Methanex Geismar I Geismar 2015 1.0Methanex Geismar II Geismar 2016 1.0South Louisiana Methanol St. James 2017 1.8Yuhuang Chemical I St. James 2018 1.7Castleton Commodities Plaquemine 2018 1.8Yuhuang Chemical II St. James 2021 1.3
Oregon Projects City YearCapacity,
million mt/yearNorthwest Innovation Works (BP - China) Clatskanie 2018 1.8
Washington Projects City YearCapacity,
million mt/yearNorthwest Innovation Works (BP - China) Kalama 2017 1.8Northwest Innovation Works (BP - China) Kalama 2021 1.8Northwest Innovation Works (BP - China) Tacoma 2021 1.8
Slide 6
0
2
4
6
8
10
12
14
16
18
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
million tons US Changing from Methanol Importer to Major Exporter
US Methanol Production US Methanol DemandSource: MSI
US Methanol capacity additions = Structural Market Change
IMPORTS
EXPORTS
Slide 7
10 Million Ton Expansion in Mid East Organic Exports over 5 years (+8% p.a.)
3 4 4 4 4 5 5 5 7
9 10 10 8 9 8 9 10 11 11 11
1 2 2 2 3
3 3 4
4
5 6 7
7 7 6
7 7
7 7 8 1
2 2 1
2 1
2 3
4 5
0
5
10
15
20
25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
million tons
Methanol MEG P-Xylene Benzene MTBE Others
Source: MSI, Navig8 Research
Total Mid East Exports
Slide 8
Methanol From U.S./Caribs to Asia – The New Trade
2014 5 million tons x 2,000 miles
REQUIRES EQUIV OF 11 HANDY
CHEMICAL TANKERS
2019 8 million tons x 6,000-11,000 miles
REQUIRES EQUIV OF 49 HANDY
CHEMICAL TANKERS
We will Need the Equivalent of an Extra 38 Handy Tankers for this trade alone
Slide 9
Even More Long Haul Trades From the Middle East
2014 5 million tons x 2,000 miles
REQUIRES EQUIV OF 11 HANDY
CHEMICAL TANKERS
2019 8 million tons x 6,000-11,000 miles
REQUIRES EQUIV OF 49 HANDY
CHEMICAL TANKERS
+7 million tons
+2 million tons
2014 to 2019 +9 million tons x 6,000-7,000 miles
REQUIRES EQUIV OF AN EXTRA 42 HANDY
CHEMICAL TANKERS
THESE CHANGES REQUIRE THE EQUIVALENT OF AN EXTRA 80 HANDY CHEMICAL TANKERS
60% OF THIS INCREASE IS FOR METHANOL
Zinc, Stainless Steel and MarineLine/InterLine 9001
Slide 10
0
2
4
6
8
10
12
14
16
18
20
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
million dwt
Short Haul Stainless Steel
Short Haul Epoxy coated
Long Haul Epoxy coated
Long Haul Interline 9001 MarineLine Stainless Steel
Source: MSI, based on organic/inorganic chemical trades
Specialised Coatings Better Suited to Chemical Tanker Demand Growth
Slide 11
We Have Seen Developments in LPG, Crude & Products
STRUCTURAL CHANGE IN CHEMICALS ARE UNDERWAY
US & MIDDLE EAST PETROCHEMICAL PROJECTS IN THE PIPELINE
DEMAND IS IN ASIA = LONG HAUL TRADES & LARGER VESSELS
SPECIALISED COATINGS A BIG ADVANTAGE
INVEST TO MEET THE EMERGING MARKETS
Slide 12
THANK YOU DISCLAIMER AND CONFIDENTIALITY This presentation was produced by and the opinions expressed are those of Navig8 Group as of the date of writing and are subject to change. Navig8 Group reserves the right to make changes to the information in this presentation at any time without further notice. The information contained herein is given in good faith but without guarantee and Navig8 Group does not make any representation as to its accuracy or completeness and does not accept liability for any loss and/or damage arising from the use hereof. A party taking any commercial decision based on information provided in this document shall be solely responsible for making an independent appraisal and/or evaluation and forming its own opinion Neither this presentation nor any of its contents may be used, copied, reproduced, disseminated, quoted or referred to in any presentation, agreement or document (with or without attribution to the Navig8 Group) at any time or in any manner without the express, prior written consent of the Navig8 Group. Navig8 Group consists of Navig8 Limited of First Island House, Peter Street, St. Helier, Jersey and all of its subsidiaries.