15 nicola williams
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The VLGC Carrier Market
Riding the next wave ofchange
Nicola WilliamsClarksons Gas DepartmentIHS Asia LPG Seminar, June 12-14 2013www.clarksons.com
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Spot Earnings Volatility & PricingVLGC Rates Freight as % of Landed Costs
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Newbuilding Price MovementsHistorical VLGC Newbuilding Prices Inflation Adjusted Newbuilding Prices
Data Source: Clarksons
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Forward VLGC Fleet DevelopmentFleet Sized >60,000 cbm
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MARPOL Annex VI
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
SulphurContent(%)
SECA/ECA
Global
EU SulphurDirective ~
Revised Annex VIentered into force inJuly 2010 introducingECAs
Entered into forcein May 2005
Additional rules for allships at berth in EUports from Jan 2010
Data source: IMO/EU* 2020 global reduction may be delayed subject to feasibility study~ For inland waterway vessels and ships at berth in European Community ports,
Impact of RegulatoryChanges
Up to 3 different grades of
bunker fuel required in so me
trades
Not considered technically
feasible to reach level of 0.1%
sulphur wi th heavy fuel oil
implies use of gasoil
Price differential
Potential cost s to adapt
engine room
Scrubbers may be used toreduce the SOx emissions
LNG as a fuel
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Fuel Savings Eco NewbuildingsAssessed Annual Bunker Cost Savings
Fuel efficiency gains in newbuildingsexpected to impact tradingeconomics
Strong financial incentive in anenvironment of high oil/bunkerprices & impending change inRegulations
Developments expected to impactbottom-line $ pmt economics. Couldwe see a two-tier freight marketdeveloping?
Based on a 5 Mt/day Fuel saving
Data Source: Clarksons
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LPG PricingPropane Pricing Butane Pricing
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US Export Volume Growth Terminal Exp.
Source: Clarksons
Estimated Export Capacity as of end Year (Maximum Capacity)
+3.5-4.5
+2.3-3
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US Gulf VL/LGC Liftings by Destination
2012/13 Liftings
In 2012, approx 12% of the volume found a home East of Suez
Arbitrage Movements
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3.95.9
2.1
42.6
Vessel Demand Sensitivities for Load/Disport Alternatives
2.5
2.1
2.8
Load Discharge via Est.Total Days RV (inc in Port, Bunker & Canal Transit Time) 1 M MTPA = VLGC equivalent
US Japan Panama 62 3.9
US Japan via Cape of Good Hope 94 5.9
US N.W.E 34 2.1
US Chile Panama 33 2.1
US Brazil 39 2.5
W.Africa Chile 44 2.8
W.Africa Japan via Cape of Good Hope 64 4.0
AG Japan 41 2.6
Sensitivities of Shipping Demand by Source of Origin/Destination
Panama Expansion Impact on Vessel Demand
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On Purpose Petchem Production GrowthPlanned Projects by Volume & start-up date
New Propylene Dehydro capacityshould provide a boost to PropaneDemand
Some of this will translate intoadditional import demand in Asia, mostnotably in China
PDH also more appealing in the US asPropane availability rises (due to shale
production) and as prices are morecompetitive. Increased use of Ethaneas a steam cracker feedstock is alsotightening Propylene supply
Source: Clarksons, ICIS & industry announcementsN.B includes projects under study/planned
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Deficit/Surplus ofVessels (LHS)
Global Seaborne LPG Trade Outlook
Exports by Region Imports by Region
Data Source: Clarksons
xpor t Sens i t i v i t y toI r an i an Vo l umes
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Growth East v West Arbitrage PotentialDemand/Supply East Demand/Supply West
Note Based on current regional growth projections
Source: Clarksons
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Vessel Deficit/Surplus by Year
Data Source: Clarksons
VLGC Demand/Supply Balance
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