pradeep rajan platts shipping
TRANSCRIPT
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Consists of a global team, working from offices in London, Singapore and Houston
Publishes three daily reports: Dirty Tankerwire, Clean Tankerwire and Dry Freight Wire
Hundreds of daily assessments, real time news, analysis, unique reports, podcasts, videos
Hands-on expertise in freight markets through daily engagement with a wide variety of sources, including brokers, charters, shipowners, traders, agents etc.
Robust methodology to ensure transparency and integrity in all assessments
PLATTS SHIPPING
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LATEST FROM PLATTS: TIME CHARTER EQUIVALENTS
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• After prolonged consultation with the industry, Platts launched TCE assessments for Supramax, Panamax and Capesize vessels to reflect the $ per day pricing derived from the respective voyage rates published on a $ per metric tons basis in the Platts Dry Freight Wire
• Platts TCE assessments are derived from voyage charter freight rates, which are largely considered as a leveling factor for the shipping market. The calculation is done meticulously with a set of standardized parameters such as vessel size, port cost, bunker consumption/cost, vessel speed etc., which are obtained through an exhaustive industry survey
• Dry bulk shipping companies track their earnings in $/day and having a TCE index to compare against time charter and voyage charter rates, makes it an ideal index that can be used to hedge freight risk
• The TCE analysis along with technical analysis can offer guidance to shipowners, operators and charterers to make informed trading decisions
LATEST FROM PLATTS: TIME CHARTER EQUIVALENTS
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• Supply Side Dynamics: The Balancing Act
• Demand Side: The Steel Track
• Demand Side: The Coal Track
AGENDA
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BALANCING ACT: NEWBUILDING ORDERS FALLING
Source: Banchero Costa
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BALANCING ACT: DEMOLITION BRINGING DISCIPLINE
Source: Banchero Costa
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BALANCING ACT: SPUR IN SECONDHAND ACTIVITY
Source: Banchero Costa
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WORLD STEEL PRODUCTION: CHINA HAS LION’S SHARE
2015 2016
Source: World Steel Association
11Source: World Steel Association
WORLD STEEL PRODUCTION: THE GIANT IS CHINA
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WORLD STEEL PRODUCTION ANNUAL GROWTH TREND
Source: World Steel Association
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STEEL EXPORTS-IMPORTS HELPS TON MILE DEMAND
Source: World Steel Association
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WORLD DEMAND OUTLOOK – LOOKING POSITIVE
Central/S America2016 2017 40.8 MT 42.5 MT
World 2016 2017
1,502 MT 1,510 MT
Source: World Steel Association
*MT - Million metric tons
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CHINA IRON ORE HUNGER CONTINUES UNABATED
Source: China Customs
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CHINA IRON ORE IMPORT FROM INDIA, IRAN SPIKE
Source: S&P Global Platts
• In 2011, India accounted for around 10% of China’s total imports• In 2016, India exported over 15 million mt, which is 1.5% of China’s total imports
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SCRAPPING HELPING CAPESIZE FREIGHT RATE
Source: S&P Global Platts, Banchero Costa
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INDIAN STEEL EXPORTS UP AS CAPACITIES SPIKE
• India’s finished steel exports in 2016 December soared 92% on-year to 747,000 mt
• Current steel capacity is 122 million mt/year but it is underutilized
• Overall finished steel output during last April-January up 10.7% on-year to 82.87 million mt – making for an annualized total of 99.4 million mt/year
• Consumption up by 3.5% y-o-y to 68.89 million mt (or 82.6 million mt annualized)
• India could become world’s 2nd biggest steel producer after China in the next 12-18 months as steelmakers add capacities in anticipation of upcoming demand
Source: S&P Global Platts
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CHINA BACK TO THE COAL PLAY
Source: S&P Global Platts
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ASEAN COAL IMPORTS STAYING HEALTHY
Source: S&P Global Platts
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COLOMBIAN COAL EXPORTS BY REGION
Source: S&P Global Platts
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COLOMBIAN COAL ADDS TO TON MILE DEMAND
Source: S&P Global Platts
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POWERING UP - CHINA CONSUMPTION STEADY
Source: S&P Global Platts
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POWER HUNGRY - MAKE IN INDIA MAY BE WORKING
Source: S&P Global Platts
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CREST & TROUGH – JAPAN CONSUMPTION SEE-SAWING
Source: S&P Global Platts
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PERIODIC SPARKS – SOUTH KOREA DEMAND HOLDING
Source: S&P Global Platts
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POWER TRIP – THAILAND HAS A SLIGHT DEMAND DIP
Source: S&P Global Platts
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POWERING UP – MALAYSIAN DEMAND INCREASING
Source: S&P Global Platts
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CHINA COAL DEMAND LIFT SUPPORTING FREIGHT
Source: S&P Global Platts
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COAL FROM RUSSIA’S FAR EAST GOING PLACES - 2013
Source: Scatterflow analysis through CFlow, Platts trade flow software
*From Nakhodka
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COAL FROM RUSSIA’S FAR EAST GOING PLACES - 2016
Source: Scatterflow analysis through CFlow, Platts trade flow software
*From Nakhodka
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• Australian thermal coal exports are expected to be 206 million mt in 2017, up from 197 million mt in 2016
• Indonesian shipments are expected to be at 282 million mt for 2017, substantially down from 330 million mt in 2016
• Colombia’s export volumes for 2017 expected to be 87 million mt from 83 million mt in 2016
• Russia’s export could touch 140 million mt in 2017, up from 135 million mt in 2016
• South African exports to be at 81 million mt in 2017, up on year from 78 million mt
• US export tons in 2017 are estimated at 18 million mt, down from 20 million mt in 2016
• China's and India's import volumes for thermal coal in 2017 are predicted to stay unchanged on-year at 157 million mt and 166 million mt
• Negligible change is expected for North-east Asia importers Japan, Korea and Taiwan, which have a combined intake of 299 million mt
HOW IT COULD LOOK IN 2017
Source: S&P Global Platts, Australia’s Department of Trade & Industry
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• Market participants expecting a stable and steady freight market environment. Strong sentiment heard from iron ore and coal sectors with Chinese demand forecast in the positive territory
• Discipline in newbuilding orders and perk up in secondhand sales are helping to balance the supply side, which is offering owners control over freight negotiation
• Inbound and outbound dry bulk trade from India picking up, which is adding to demand in this sector. Visible increase in limestone imports and iron ore exports
• Pick up in dry bulk commodity prices helping increase ton-mile demand, thanks to arbitrage plays
• Forward Freight Agreement market seeing an increase in trading volumes, especially in the Panamax and Supramax segments
WILL 2017 BE A SMOOTH VOYAGE?
#PlattsLOF
R CRUDE PRICES AFTER OPEC’S 2016 CUT?WHATS HAPPENING IN THE OIL MARKETS
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CAN THE CUTS BRING BALANCE?
Saudi Arabia has taken the lead, with Russia following
Compliance appears strong so far
Cuts come at a time of record output and seasonal lulls
A lasting deal is not easy
Saudi Arabian crude output (mmb/d)
Source: S&P Global Platts
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OPEC AND NON-OPEC CUTS FOR H1-17
SudanBrunei
South SudanBahrain
Equatorial GuineaMalaysia
KazakhstanAzerbaijan
OmanMexicoRussia
IranNigeria
LibyaGabon
EcuadorQatar
AlgeriaAngola
VenezuelaKuwait
UAEIraq
Saudi Arabia
-100 0 100 200 300 400 500
(exempt)
OPEC
NON-OPEC
(in ‘000 b/d)
Source: OPEC, S&P Global Platts
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OPEC COMPLIANCE
*(million b/d)
Source: OPEC
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US CRUDE OIL EXPORTS PRE-, POST-BAN LIFT
USASwitzerland
Spain
South Korea
France
India
0 5,000 10,000 15,000
Top 10 destinations pre-ban lift, Dec-14 to Nov-15 (‘000 b)
Netherlands
Italy
UK
Singapore
Japan
Dec-14
Feb-15
Apr-1
5Jun
-15Au
g-15Oct-
15Dec-
15Feb
-16Ap
r-16
Jun-16
Aug-1
6Oct-
160
100200300400500600700800
Pre ban lift Post ban lift
Source: Banchero Costa
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US RIGS & STOCKS
Source: EIA, Baker Hughes North American Rig Count
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GLOBAL MARKET BALANCES
Source: EIA, S&P Global Platts
In million b/d)
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CHINA’S CRUDE OIL IMPORTS ON THE UPWARD PATH
Record 8.6 mil b/d in Dec 2016
• China imported a total of 7.6 million b/d of crude in 2016, up 13.3% from 6.7 million b/d in 2015
• China continues to build its strategic petroleum reserves
• Crude import licenses granted to independent refiners from mid-2015
First batch of 2017 Crude Import Quotas for China’s independent refiners
Source: S&P Global Platts China Oil Analytics
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IMO MARPOL 2020 – CUTTING SULFUR AT SEA
IMO Sulfur Limit (%S)
Source: IMO
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• Chinese crude demand growth has slowed but keeps going
• Further potential for additional crude supplies from Libya, Nigeria
• Reviews of refinery slates and technology as MARPOL 2020 nears
• Cuts by OPEC and others could provide a fragile new floor
• Flexible US shale output has set the ceiling
FURTHER ISSUES FOR 2017
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Q&A SESSION