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VLCC spot and one-year time charter rates Newbuildng & secondhand 5 year old prices
180 180
160 160
140
US$ million
'000 $/day
120 140
100 120
80 100
60
40 80
20 60
0 40
Jan-Feb’10
1Q00
4Q00
3Q01
2Q02
1Q03
4Q03
3Q04
2Q05
1Q06
4Q06
3Q07
2Q08
1Q09
4Q09
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
VLCC Spot TCE VLCC 1 yr TC VLCC (Newbuild) VLCC (Secondhand)
Benchmark VLCC time charter rates in 1Q10 (Jan-Feb) are down by 64% as compared to the peak in 3Q08.
New building prices are down by 40% from the highs in 3Q08, while second hand prices down 50%.
The VLCC market is still above where we started the decade in 2000 i.e. it is not that bad out there!!!
1
Tanker fleet development
350
300 through 2010-13.
250
200
150 Highest growth expected in 2011 (up 7.4%).
100
50
0
There will be cancellations and delays which will
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
push the current order book to 2013 and beyond.
Handy Panamax Aframax Suezmax VLCC
million dwt
40% Orderbook 125 ships 20
8.2 Mdwt 20.5 Mdwt
30% Orderbook 125 ships 15
186 ships
% of fleet
5.2 Mdwt
20% 137 ships 10
5
10%
0
0% 10 11 12 13+ 10 11 12 13+ 10 11 12 13+ 10 11 12 13+ 10 11 12 13+
Handy Panamax Aframax Suezmax VLCC Handy Panamax Aframax Suezmax VLCC
2
VLCC fleet development
VLCC deliveries and deletions How much will be delivered and when?
25 68 Significant VLCC tonnage (~53 million dwt) to be delivered
More new
20 53 through 2010-12. Deliveries will peak in 2011. We have
51 47 orders?
15 37 41 assumed some of the current order book will be delayed
million dwt
29 31 29
10 24 until the 2013-2015 period.
18 15
5 3
0 ` How much will be removed and when?
-5 4 1 4 6 2 3
10
19 19
-10 About 24 million dwt of VLCC tonnage is SH/DB/DS.
34 37
-15 Approx. 10 million dwt of VLCC’s aged 13-16 years likely
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
to continue to trade beyond 2010, trading to China, India,
Taiwan.
Deliveries Deletions
Conversions into bulk and offshore projects.
% change y-o-y
10% VLCC CAGR (2010-15) = 4.3%
million dwt
150 8%
6%
100 4%
VLCC: Feb’10 162.7 Mdwt
2%
50 2013 205.4 Mdwt
0%
0 -2% 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
3
Crude oil trade
million bpd
R
million bpd
85 C A
A GG 70
C
60
OPEC
80
50
75
40
70 30 Non-OPEC
65 20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Oil demand/supply growth Planned refinery capacity additions
10% 2,500
8% 2,000
'000 bpd
6% 1,500
% growth
4% 1,000
2% 500
0% 0
Africa
FSU
Other
China
Middle
America
America
Europe
OCED
Asia
OECD FSU Asia Latin Middle Africa
OECD
East
North
-2%
Latin
America East
-4%
Oil demand CAGR (2006-08) Oil production CAGR (2006-08) 2010 2011 2012 2013 2014
4
Tonnage demand
million tonnes
million tonnes
37%
8% 60 25% 150
43% 24%
4% 40 21% 100
26% 12% 10%8%
19% 11%
0% 20 50
5% 4% 4%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-4% 0 0
2000 2004 2008
-8%
Oil consumption Tonne-mile trade Middle East Other Asia Pacific
Africa FSU
Global GDP America and Europe Total (right axis)
5
Changing trade patterns are evident. For instance,
0
China’s reliance on imports from Africa and Middle
-5 East is rising.
Forecast
-10
Inventory building and speculative demand.
-15
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
5
VLCC supply & demand balance
VLCC supply-demand balance
220 80
Avg. for More orders?
Jan-Feb'10 70
200
60
million dwt 180
'000 $/day
50
160 40
Forecast
30
140
20
120
10
100 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Demand Case 1
Demand recovery is expected to be strong especially when seasonality,
Oil demand growth 2009-15 1.4%
speculative, inventory building is factored in.
Oil trade growth 2009-15 2.7%
The current order book is a big problem for the supply side, however
VLCC Tonne-mile growth 2009-15 6.1%
delays, cancelations and phasing out of single hulls will assist.
Demand Case 2
On balance we would expect a weak freight market into 2012, after which
Oil demand growth 2009-15 2.2% there could be a gradual recovery.
Oil trade growth 2009-15 4.2%
However………………..
VLCC Tonne-mile growth 2009-15 7.5%
6
Summary
Shipyard capacity
Recovery if any, will be fragile and only
200
180
if there are no further new building
160 ordering.
140
Shipyards There is excessive shipbuilding capacity
million dwt
120
have and yards will reduce prices to get new
100
plenty of orders rather then be idle.
80
capacity
60
40
New orders will further delay recovery.
20
Lower New building prices will act as a
0
cap to second hand values.
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
We have already seen new orders
placed this year.
7
Thank you