Opportunities and Outlook for the Shipping...
Transcript of Opportunities and Outlook for the Shipping...
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Opportunities and Outlook
for the Shipping Markets
James Frew - Maritime Strategies International (MSI)
8th Capital Link Greek Shipping Forum – 15th February 2017
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Outlook and opportunities
1. Sector Correlations
2. Demand outlook
3. Supply side
4. Price Drivers
5. Recovery?
Agenda
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Sector correlations
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Outlook and opportunities
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Shipping – a correlated industry
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Commodity shipping sectors well correlated with each other, but not offshore and LPG
1) 2) 3) 4) 5) 6)
1) Containerships
2) Bulkers
3) Tankers
4) Chems
5) LPG
6) OSV
7) Drilling Rig
>75% Correlated
>50% Correlated
<50% Correlated
Negatively Correlated
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Demand only explains part of the story
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Most sectors are positively correlated, but not tightly so
>75% Correlated
>50% Correlated
<50% Correlated
Negatively Correlated
1) 2) 3) 4) 5) 6) 7) 8) 9) 10)
1) Crude Oil
2) Product
3) Chemicals
4) LPG
5) LNG
6) Bulker
7) Container
8) PCTC
9) Cruise
10) AHTS
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It is supply that is wrecking the markets
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Sup
ply
Sup
ply
Sup
ply
Sup
ply
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Demand
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Outlook and opportunities
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Headline Trade Ratio has Stalled
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Tradewinds, May 26th 2016
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And the container trade/GDP multiplier has broken down?
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0
1
2
3
4
5
6
7
8
9
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
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2006
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2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Trade/GDP MultiplierYoY Ch
Global GDP
"Multiplier" (RH Axis)
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Recovery from recessions
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0
20
40
60
80
100
120
Ye
ar
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
Ye
ar
6
Ye
ar
7
Ye
ar
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Ye
ar
9
Ye
ar
10
Ye
ar
11
Ye
ar
12
Trade to GDP ratio, Year 0 = 100
1927-1939 1980-1992 2007-2015
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The bigger picture
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0%
10%
20%
30%
40%
50%
60%
70%
1870
1874
1878
1882
1886
1890
1894
1898
1902
1906
1910
1914
1918
1922
1926
1930
1934
1938
1942
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Trade as a %age of Global GDP
Cyclical
Cyclical?
Structural
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Supply
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Outlook and opportunities
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Orderbook/Fleet ratio – looking good??
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0%
10%
20%
30%
40%
50%
60%
70%
80%B
ulk
er
2003
Bu
lke
r 2
008
Bu
lke
r 2
016
Ta
nk
er
200
3
Ta
nk
er
200
8
Ta
nk
er
201
6
Orderbook to fleet ratio
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How Many Ships?
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Routes Distance
Size Changes Carrying Capacity Ballast Ratio
Waiting/Port Time Speed
Operating Days
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The key is the demand side…
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0
50
100
150
200
250
300
350B
ulk
er
2003
Bu
lker
2008
Bu
lker
2016
Tan
ker
2003
Tan
ker
2008
Tan
ker
2016
Mn Dwt
Orderbook Incremental demand over following three years
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…which doesn’t look so good
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0%
50%
100%
150%
200%
250%
300%
350%
400%
Bu
lke
r 20
03
Bu
lke
r 20
08
Bu
lke
r 20
16
Ta
nk
er
20
03
Ta
nk
er
20
08
Ta
nk
er
20
16
Ratio
Orderbook to Fleet ratio
Orderbook relative to vessel demand
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Shipyard Capacity Is a Worry
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0
10
20
30
40
50
60
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Mn CGT Other Europe China Korea Japan
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Yards Don’t Just Disappear
Yards have become ghost
towns… but haven't disappeared
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Shipyard Capacity – Déjà Vu
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0
2
4
6
8
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20
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
Mn CGT Other Europe China South Korea Japan
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Price drivers
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Outlook and opportunities
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What drives asset price formation?
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Directional Analysis
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-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Q4
10
Q1
11
Q2
11
Q3
11
Q4
11
Q1 1
2
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
Q1
15
Q2
15
Q3
15
Q4
15
Q1
16
Q2
16
Q3
16
Q4
16
QoQ % Change NB Price 1 Yr TC Rate 5 Yr Price
VLCC
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Quarters where 2nd hand price moves with NB price only
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0
20
40
60
80
100
120S
up
ram
ax
Pa
na
ma
x
Ca
pesiz
e
MR
Afr
am
ax
VL
CC
# of Quarters
No Yes
Since 1990
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NB Price Outlook
FC Pricing Power - OWNERS
FC Pricing Power - YARD
FC = forward cover
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Recovery?
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Outlook and opportunities
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MSI - FMV
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• MSI Forecast Marine eValuator (FMV) is the first web-based tool to provide forecast and historical price
data covering virtually all of the deepsea shipping fleet.
• Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and operating costs
for specific vessels.
• MSI FMV draws on MSI’s proven, proprietary models and a consistent cross-sectional view across all
principal shipping sectors. It puts asset values in the context of the near term market to enable reliable
benchmarking with outputs based on annual averages.
• Coverage:
Crude Oil Tanker
Product Oil Tanker
Dry Bulk Carrier
Chemical Tanker
LPG Carrier
LNG Carrier
Multi Purpose
Containership
PCC/PCTC
www.msiltd.com/fmv AHTS PSV
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FMV Output
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Quarterly Fair Market Value & 1 Year Time Charter Rate (1Q history, current Q, 2Q forecast
Annual average: • Newbuilding contract price • Fair Market Value • 1 Year Time Charter Rate • Operating Cost 5 years history and 15 years forecast
Price Development Chart detailing forecast price development in relation to historical metrics
www.msiltd.com/fmv
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Asset play opportunities
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0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
MR
Tan
ker
Su
pra
ma
xB
ulk
er
Han
dy
Co
nta
iners
hip
DF
DE
LN
G
Sm
all A
nch
or
Han
dle
r
IRR (invest 2017, divest 2021)
Contracting New (Deliv. 2019)
Buying Secondhand (5 Yr Old)
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Asset play timespan
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0%
5%
10%
15%
20%
25%
30%
MR
Tan
ker
Su
pra
ma
xB
ulk
er
Han
dy
Co
nta
iners
hip
DF
DE
LN
G
Sm
all A
nch
or
Han
dle
r
IRR by year of divestment
2019
2021
2025
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Thank you for listening
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For over 30 years, MSI has developed integrated relationships with a diverse client base of financial institutions, ship owners, shipyards, brokers, investors, insurers and equipment and service providers. MSI’s expertise covers a broad range of shipping sectors, providing clients with a combination of sector reports, forecasting models, vessel valuations and bespoke consultancy services. MSI is staffed by economists and scientists offering a structured quantitative perspective to shipping analysis combined with a wide range of industry experience. MSI balances analytical power with service flexibility, offering a comprehensive support structure and a sound foundation on which to build investment strategies and monitor/assess exposure to market risks.
MSI Background
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While this document has been prepared, and is presented, in good faith, Maritime Strategies International assumes no responsibility for errors of fact, opinion or market changes, and cannot be held responsible for any losses incurred or action arising as a result of information contained in this document. The copyright and other intellectual property rights in data, information or advice contained in this document are and will at all times remain the property of Maritime Strategies International.
Disclaimer
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