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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 [email protected]
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. $130/tonne
Braemar Seascope
Chinese Iron Ore Re-Stocking… Why now?
Braemar Seascope
Chinese Iron Ore Stockpiles
50
60
70
80
90
100
110
Mill
ion
To
nn
es
07/03/2014
Source: Braemar Seascope Research
Braemar Seascope
Chinese Iron Ore Imports vs. Spot Price Monthly
0
20
40
60
80
100
120
140
160
180
200
0
10
20
30
40
50
60
70
80
90
US$
/ Ton
ne
M
illio
n T
on
ne
s
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
Mill
ion
To
nn
es
19/02/2014
Source: Braemar Seascope Research
Braemar Seascope
Brazilian Iron Ore Exports to China
0
5
10
15
20
25
Mill
ion
To
nn
es
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
Bill
ion
To
nn
es
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
SmallHandysize
LargeHandysize
Handymax
Supramax
Panamax
Post-Panamax
MiniCapesize
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
SmallHandysize
LargeHandysize
Handymax Supramax Panamax Post-Panamax
MiniCapesize
Capesize
Nu
mb
er
of
Ves
sels
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
SmallHandysize
LargeHandysize
Handymax Supramax Panamax Post-Panamax
MiniCapesize
Capesize
Nu
mb
er
of
Ves
sels
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
4 0
25
50
75
100
125
150
175
200
225
Nu
mb
er
of
Ves
sels
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
SmallHandysize
LargeHandysize
Handymax Supramax Panamax Post-Panamax
MiniCapesize
Capesize
Nu
mb
er
of
Ves
sels
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
