the vlgc market - imsf · the vlgc market latsco shipping limited prepared for the imsf, alba,...
TRANSCRIPT
Prepared by Dr. Mariniki PSIFIA, 2016
The VLGC Market
Latsco Shipping Limited
Prepared for the IMSF, ALBA, Athens, May 2016
Presented by Dr. Mariniki Psifia, Market Analyst
Latsco Shipping Limited
IMSF Forum (9th – 11th May 2016)
Prepared by Dr. Mariniki PSIFIA, 2016
Disclaimer
This presentation (including any oral presentation) (the “presentation”) is intended solely for the purposes of the IMS Forum 2016 and its participants. This presentation is confidential and must not be copied, reproduced, published, distributed, disclosed or passed to any other person at any time without the prior written consent of Dr. Mariniki Psifia. Without prejudice to the generality of the foregoing, this presentation may not be published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States. This presentation is for information purposes only. The information and opinions provided in this presentation are, unless otherwise stated herein, provided as of the date of this presentation and are subject to change. Certain statements are forward-looking statements. The forward-looking statements include statements typically containing the words “intends”, “expects”, “anticipates”, “targets”, “plans”, “estimates” and words of similar import. These forward-looking statements speak only as at the date of this presentation or as otherwise specifically provided herein. The forward-looking statements are based on numerous assumptions and such assumptions may or may not prove to be correct. No one undertakes to update or revise such forward-looking statements. This presentation does not constitute legal, valuation, tax, or financial consulting advice, nor is it a statement on the performance, management capability or future potential (good or bad) of the company(ies), industry(ies), product(s), region(s) or country(ies) discussed. Those interested in specific guidance for shipping, legal, strategic, and/or financial or accounting matters should seek competent professional assistance from their own advisors. Any commentary, observation or discussion contained in this presentation about a country, industry or company does not constitute a recommendation to buy or sell company shares or make investment decisions. Although the statements in this presentation are derived from or based upon various and credible information sources and/or economic models that the author believes to be reliable, the author does not guarantee their accuracy, reliability, or quality, and any such information, or resulting analyses, may be incomplete, rounded, inaccurate or condensed. All estimates included in this presentation are subject to change without notice. This presentation is for informational purposes only and may or may not be intended as a recommendation to invest or an offer or solicitation with respect to the purchase or sale of a security, stock, limited partnership instrument, or financial vehicle. This presentation reflects the views of its author and not of any one else (including of any former or current employer).
Prepared by Dr. Mariniki PSIFIA, 2016
Liquefied Petroleum Gas (LPG) is a global industry
Natural
Gas wellGas Plant Pipeline Power Generation
LNG liquefaction
LNGResidential /
CommercialPetrochemical gases
Industrial
Auto
Oil well Refinery Further refining
Chemicals
Agricultural
UserSources Transport
LPG
Dirty Products
Processing industries
Natural Gas
LPG
Ammonia
Condensates (CPP)
Clean Products
Source: Various
LPG consists of propane and butane, petroleum gases that originate either from crude oil and/or natural gas
Despite being gaseous at ambient pressure and temperature, propane and butane both liquefy relatively easily under pressure, refrigeration or combination of the two
LPG is a clean energy source compared to many other fossil fuels and it has numerous applications
LPG is substitutable in many of its applications, and its pricing is influenced by its competition with other fuels or feedstocks
Prepared by Dr. Mariniki PSIFIA, 2016
The Baltic Liquefied Petroleum Index (BLPGI) through the years
Source: The Baltic Exchange
Prepared by Dr. Mariniki PSIFIA, 2016
The U.S. poised to become the top LPG exporter within a few years
U.S. Exports of Propane and Propylene are expected to hit unprecedented levels by 2017 due to additional export projects
Source: U.S. E.I.A, 2016
…to the fastest growing LPG exporter in the world over a 6 year time span!
From the LPG sector’s importer of last resort…
???
Prepared by Dr. Mariniki PSIFIA, 2016
The US confirmed its place as the world’s leading exporter of LPG in 2015 with over 19.7 mio mt of exports – a 40.1% y/y growth
Data Source: GTIS, IHS
Prepared by Dr. Mariniki PSIFIA, 2016
2015 – What happened last year
Data Source: Clarksons SIN, Platts LPGaswire, Factsset, GTIS, IHS
Prepared by Dr. Mariniki PSIFIA, 2016
Correlations between WTI, Henry Hub Natural Gas and Propane Mont Belvieu
Propane Mont Belvieu vs WTI WTI vs Henry Hub Natural Gas
Propane Mont Belvieu vs Henry Hub Natural Gas
Propane prices
are highly correlated to
Crude oil prices
by
Prepared by Dr. Mariniki PSIFIA, 2016
The West – East Arb is firmly closed
200,0
250,0
300,0
350,0
400,0
450,0
500,0
550,0
600,0
650,0
700,0
750,0
800,0
850,0
900,0
950,0
1 000,0
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
$/mt FOB Houston FOB Arab Gulf
($125)
($100)
($75)
($50)
($25)
$0
$25
$50
$75
$100
$125
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
ARB OPEN ARB CLOSED
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16
Houston to Japan AG to Japan
The West- East Arb FOB Propane Houston vs Arab Gulf
Percentage of the Freight element to Japan CFR Price
Data Source: FactSet, Platts
Prepared by Dr. Mariniki PSIFIA, 2016
Weaker crude prices and ample supply pulled down the LPG prices in Asia
Data Source: FactSet, Platts, GTIS
Prepared by Dr. Mariniki PSIFIA, 2016
Today, VLGC Net Time Charter rate are below $20,000/day (-79% y/y)
Freight: AG-Chiba / Houston - Chiba VLGC Net Timecharter Rates
Source: The Baltic Exchange
Prepared by Dr. Mariniki PSIFIA, 2016
VLGC Timecharter Rates (TC) fell below long-term historical averages
2002-des; $400,0
2015-jul; $2 219,0
2016-apr; $816,0
$1 257,9
$938,9
250
500
750
1 000
1 250
1 500
1 750
2 000
2 250
Oct
-95
Oct
-96
Oct
-97
Oct
-98
Oct
-99
Oct
-00
Oct
-01
Oct
-02
Oct
-03
Oct
-04
Oct
-05
Oct
-06
Oct
-07
Oct
-08
Oct
-09
Oct
-10
Oct
-11
Oct
-12
Oct
-13
Oct
-14
Oct
-15
Oct
-16
Oct
-17
Oct
-18
,000 per Month
1 Yr Time-Charter
5 years average
10 years average
$4 038,8
$704,0
$1 646,9
$1 174,8
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Jan
-08
Au
g-0
8
Mar
-09
Oct
-09
May
-10
De
c-1
0
Jul-
11
Feb
-12
Sep
-12
Ap
r-1
3
No
v-1
3
Jun
-14
Jan
-15
Au
g-1
5
Mar
-16
Oct
-16
May
-17
De
c-1
7
Jul-
18
,000 per Month
82/84K CBM LPG TCE
5 years average
8 years average
1 Year VLGC TC Rates decreased by 63.2% since Jul. 15 84,000 cbm LPG TC Equivalent decreased by 84% since Jul15
Source: Clarksons SIN
Prepared by Dr. Mariniki PSIFIA, 2016
Massive cost savings for the owners because of the dramatic decline in bunker costs in 2015….do not apply anymore
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
De
c-0
2
Ap
r-0
3
Au
g-0
3
De
c-0
3
Ap
r-0
4
Au
g-0
4
De
c-0
4
Ap
r-0
5
Au
g-0
5
De
c-0
5
Ap
r-0
6
Au
g-0
6
De
c-0
6
Ap
r-0
7
Au
g-0
7
De
c-0
7
Ap
r-0
8
Au
g-0
8
De
c-0
8
Ap
r-0
9
Au
g-0
9
De
c-0
9
Ap
r-1
0
Au
g-1
0
De
c-1
0
Ap
r-1
1
Au
g-1
1
De
c-1
1
Ap
r-1
2
Au
g-1
2
De
c-1
2
Ap
r-1
3
Au
g-1
3
De
c-1
3
Ap
r-1
4
Au
g-1
4
De
c-1
4
Ap
r-1
5
Au
g-1
5
De
c-1
5
Ap
r-1
6
Bunkers Cost to Gross TCE ~ Ratio
Prepared by Dr. Mariniki PSIFIA, 2016
World LPG Trade Development For 2016 LPG exports are expected to increase by 12% to 82 mio mt
Major LPG Importers Major LPG Exporters
Data Source: GTIS. ^forecasting as per various sources
Prepared by Dr. Mariniki PSIFIA, 2016
In Q1-2016, propane and butane trade fell by 1.7% y-o-y to 16.53 mio mt*
Data Source: GTIS. * Preliminary data as per data collection on 4th May 2016
Prepared by Dr. Mariniki PSIFIA, 2016
All of US 2015 LPG exports found homes with Asian countries (China, Japan, S. Korea) absorbing the main increment of those cargoes
Data Source: GTIS - IHS, May 2016
Prepared by Dr. Mariniki PSIFIA, 2016
US Terminal Export Capacity & VLGC liftings from Targa & Enterprise (2014 – Feb 2016)
6,81 7,37 11,69
16,00 1,88 5,1
6,70
6,70
3,40
6,20 6,20 6,20 6,20 6,20
4,25
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017 2018 2019 2020
Mio MT
KinderMorgan
Sage
Phillips 66
Oxy
Sunoco
DCP
Petredec/Martin Gas
Trafigura
Sunoco/MarkWest
PetroGas
Targa
Enterprise
Estimated North America LPG Export Volume Capacities US LPG Export Scenarios based on Terminal Capacity
VLGC Estimated Liftings from Targa and Enterprise, TX (mio mt)
Data Source: GTIS / IHS. Lifting data are from AIS
26,16
19,69
37,14
26,00 27,95
29,71
15
20
25
30
35
40
TerminalCapacity
Exports 70.0% 75.3% 80.0%
2015 TerminalCapacity 2016
2016 Export Scenarios(% of Terminal Capacity)
Terminal utilization
75.3%
-
0,20
0,40
0,60
0,80
1,00
1,20
J-14 F-14 M-14 A-14 M-14 J-14 J-14 A-14 S-14 O-14 N-14 D-14 J-15 F-15 M-15 A-15 M-15 J-15 J-15 A-15 S-15 O-15 N-15 D-15 J-16 F-16
Mio Mt 2015: On average 18.6 liftings per month Est. total lifted quantity 9.8 mio mt
2014: On average 18.2 liftings per month Est. total lifted quantity 9.64 mio mt
Prepared by Dr. Mariniki PSIFIA, 2016
Middle East LPG Exports during 2015 and 1Q-2016
Split between Long-Haul and Short-Haul Importers
Who has exported the most during Q1-2015 & Q1-2016 Middle East LPG Exports y/y comparison in mio mt*
AG to China: +15.6% y/y
0,02
1,18 0,95
2,43
1,39
3,23
0,01
0,73 0,77
1,95
0,86
2,71
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
Bahrain Iran Kuwait Qatar Saudi Arabia UAE
Mio mt
[Q1-2015]
[Q1-2016]
70% 65%
60% 56% 51%
37% 31%
40%
22% 24% 30%
35% 40% 44%
49%
63% 69%
60%
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2007 2008 2009 2010 2011 2012 2013 2014 2015 3M-2016
Long-Haul Short-Haul
2014 2015 y-o-y 3M-2015 3M-2016 y-o-y
China 7.79 10.91 39.9% 2.24 2.59 15.6%
India 7.51 8.28 10.3% 2.03 0.77 -62.0%
Japan 8.20 7.99 -2.6% 2.62 2.32 -11.5%
Indonesia 3.23 3.84 18.8% 0.84 0.63 -25.1%
Korea, South 3.77 3.08 -18.2% 0.88 0.47 -46.3%
Thailand 1.79 1.30 -27.6% 0.34 0.21 -39.7%
Other 0.917 1.04 13.7% 0.25 0.05 -81.7%
Total* 33.21 36.44 9.7% 9.20 7.03 -23.6%
Data Source: GTIS. * Preliminary data as per data collection on 4th May 2016
Prepared by Dr. Mariniki PSIFIA, 2016
Iran LPG Exports following the removal of International Sanctions and South Pars 24-phase development plans
0,23 0,52 0,40
0,63
1,5
8 2
,52
2,8
9 3
,74
2,3
1
0,7
1
2,8
1
3,7
4
0,7
1
0
1
2
3
4
5
6
7
8
9
10
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
(f)
20
17
(f)
20
18
(f)
20
19
(f)
20
20
(f)
mio MT
Other Middle East Asia & Oceania Africa
The South Pars fields Iran LPG Historical and Future Estimated Exports
The South Pars Development Plans
Data Source: GTIS and Information from 10th LPG Trade Summit, Istanbul 2015, FGE. Prepared by Dr. Mariniki Psifia
Natural gas production from South Pars is critical to meet
increasing domestic consumption and Iran’s current
& future export obligations
Prepared by Dr. Mariniki PSIFIA, 2016 Data: GTIS / HIS. 2016 :̂ 3M-2016
During Q1-2016, China’s seaborne LPG imports totalled 4.4 mio mt, up by 47.8% y-o-y
0,60 0,54 0,60 0,41 0,63 0,82 1,09
3,69
5,04
1,31 0,38 1,14 1,21 0,77
0,44
2,56
3,58
0,68
0,77
3,57
1,19 0,73 0,59
1,47 1,21 1,06 0,99
1,48
1,78
2,49
1,01
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
18,0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016^
Mio mt UAE Iran Kuwait USA Saudi Arabia Other
Africa 8,66%
Asia & Oceania 3,04%
Eurasia 0,05%
Europe 1,98%
Middle East 50,11%
North America 36,16%
Prepared by Dr. Mariniki PSIFIA, 2016
India LPG Imports keep increasing
2014-2015 Monthly Indian LPG Imports Yearly Indian LPG Imports
Propane and Butane split
1,71 2,11
3,42 3,67
0,41 0,26 0,38 0,32
1,06
1,22
1,11
1,60 1,61
1,25 1,44 1,26 1,60
1,76
1,30
1,42
1,55
2,22
0,23 0,30 0,27
0,45
0,63
0,99
0,78
0,86
0,75
0
1
2
3
4
5
6
7
8
9
2007 2008 2009 2010 2011 2012 2013 2014 2015
Mio mt
Qatar United Arab Emirates
Saudi Arabia Kuwait
Bahrain Iran
Other
0,3
0,4
0,5
0,6
0,7
0,8
0,9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mio mt [Imp 2014] [Imp 2015]
Data Source: GTIS/IHS
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
J-15 F-15 M-15 A-15 M-15 J-15 J-15 A-15 S-15 O-15 N-15 D-15
Butane Propane
Prepared by Dr. Mariniki PSIFIA, 2016
LPG Fundamentals: Supply
• VLGC units currently number 220 ships of a total 17.38m cu.m,
• The y-o-y VLGC growth is today equal to 29.4% in number of vessels and
it is expected to exceed the 34.17% by June 2016.
• The orderbook is quite heavy for the specific sector with 29.2% of the
fleet in cu.m terms currently on order (65 vessels).
• Since the beginning of 2016, 22 VLGC of a total 1.84 mio cu.m were
delivered and 3 new VLGC orders were placed to the shipyards
VLGC Supply Growth* in number of vessels
Source: Clarksons. * Slippage and Cancellations are not included
Deliveries and Orderbook in number of vessels
6
2
11
3
1
2 1
1
1
0
1
2
3
4
5
6
7
8
9
10
11
12
J-1
6
F-1
6
M-1
6
A-1
6
M-1
6
J-1
6
J-1
6
A-1
6
S-1
6
O-1
6
N-1
6
D-1
6
VLGC LGC MGC HGC
25 24
11
3 2
11
24
2
8
24
1
0
10
20
30
40
50
60
70
80
M A I . 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0
VLGC LGC MGC HGC
10
6
11
0
13
0
13
7
14
0
14
0
14
2
15
5
16
3
19
8
22
0
24
5
26
9
28
0
25
24
11
3
2015; 21,5%
2016; 23,7%
-3%
0%
3%
5%
8%
10%
13%
15%
18%
20%
23%
25%
28%
50
75
100
125
150
175
200
225
250
275
300
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
y-o-y growth # of vessels
VLGC
Estimated Deliveries
y-o-y growth
Prepared by Dr. Mariniki PSIFIA, 2016 Data: Clarksons SIN
LPG Fleet – Size Ranges, Cargo Capability & Tank Type
The fleet (in number of vessels)
Orderbook (in number of vessels)
Orderbook - to - Fleet Ratio (in number of vessels)
38 MGC
33 HGC
65 VLGC
98 HGC
2 LGC
Prepared by Dr. Mariniki PSIFIA, 2016 Data: Clarksons SIN
Currently the VLGC fleet stands at 220 vessels of 17.93 mio cu.M
80
62
23 17 20
13 5 0
10
20
30
40
50
60
70
80
90
0 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 +
# of vessels
VLGC average age is 9.4 years old
VLGC Fleet Profile 38 vessels are older than 20 years old
The Fleet
220
0
25
50
75
100
125
150
175
200
225
250
VLGC
The Orderbook
60
5
-
20
40
60
80
100
120
140
160
180
200
VLGC
LPG Ethane Capable
In just 10 years, the average VLGC age fell by 47.7% to less than 9.4 years old
18,0
15,7 14,9
14,3 14,1 13,9
13,0 12,5
10,4
9,40 8,0
10,0
12,0
14,0
16,0
18,0
20,0
2007 2008 2009 2010 2011 2012 2013 2014 2015 Mar-16
Average Age
Fleet As of Start 2016 16.09 198
Deliveries 1.84 22
Demolitions - -
Fleet As of today 17.93 220
NET FLEET CHANGE 1.84 22
Orderbook [2016 - 2020] 5.24 65
Orderbook to Fleet 29.2% 29.5%
VLGC ≥ 61,000 cu.M.in million
cu.m.
in number of
vessels
Prepared by Dr. Mariniki PSIFIA, 2016
VLGC Fleet Per Year of Built & Orderbook
- 2
- - 1 1 1 - 1
5 6 8
6
1 2 3 2 -
3 5
7
3
8
2 3
7
11
27
12
9
3 2
13
8
35
22
25
3
20
11
3
1
2 -
5
10
15
20
25
30
35
40
45
50
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
NUMBER OF VESSELS
YEAR OF BUILT
VLGC Fleet [Contract Year 2014] [Contract Year 2015] [Contract Year 2016]
Source: Clarksons SIN
Prepared by Dr. Mariniki PSIFIA, 2016
The VLGC Orderbook per Yard
Hyundai; 27; 49,1%
Jiangnan SY Group; 4; 7,3%
Jiangnan Changxing; 12.5%
Kawasaki HI Sakaide; 4.2%
MHI Nagasaki; 8; 14,5%
Shanghai Waigaoqiao; 2;
3,6% DSIC Offshore; 5;
9,1%
8
11
3
2
15
2
2
1
4
2
1
2
3
2
0 10 20 30 40
Daewoo (DSME)
Hyundai
DSIC Offshore
Jiangnan SYGroup
Jiangsu New YZJ
Kawasaki HISakaide
MHI Nagasaki
ShanghaiWaigaoqiao
2016 2017 2018
2019 2020
The Orderbook per Yard
(in number of vessels)
Scheduled Deliveries per Year
(in number of vessels)
Source: Clarksons SIN
Prepared by Dr. Mariniki PSIFIA, 2016
VLGC y-o-y fleet growth and timecharter equivalent rates (TCE)
apr.16; 30,51%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
$0
$10 000
$20 000
$30 000
$40 000
$50 000
$60 000
$70 000
$80 000
$90 000
$100 000
$110 000
$120 000
$130 000
$140 000
de
s.1
1
feb
.12
apr.
12
jun
.12
aug.
12
okt
.12
de
s.1
2
feb
.13
apr.
13
jun
.13
aug.
13
okt
.13
de
s.1
3
feb
.14
apr.
14
jun
.14
aug.
14
okt
.14
de
s.1
4
feb
.15
apr.
15
jun
.15
aug.
15
okt
.15
de
s.1
5
feb
.16
apr.
16
Y-o-Y Growth $/Day 82K CBM LPG TCE Rates VLGC Growth*
Historical Data: Clarksons SIN. * VLGC Growth in cu.m
Prepared by Dr. Mariniki PSIFIA, 2016
As per current shipyard delivery schedule, it is estimated that the VLGC fleet y-o-y growth will peak in June 2016
Source: Historical Data Clarksons SIN