Monthly S&P Report. Crude/product HIGHLIGHTS. Gas. Chemical. Dry. Hot Hulls. September Crude/product: Activity.

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1 September 2015 Monthly S&P Report HIGHLIGHTS Crude/product: Activity remains active in both segments Dry: Strong S&P interest amidst bearish forecasts Chemical: Navig8 takes delivery of IMO II tanker Gas: Orders to the fore as Tier III looms Hot Hulls Crude/product The market is active, both in the flurry of (mostly product) newbuilding orders and in second hand. There has been a noticeable increase in interest for the handysize product carrier market. Notable sales include the 7 ship 37k dwt (Mipo 2007/08blt) BBHP deal from Geden to Hafnia, all the vessels are Ice-1A. Additionally, in the same sector we have seen the sale of the sister-ship STI Highlander (37k / 2007 / Mipo also Ice-1A) from Scorpio to Norden at region US$19.35m and the Maersk Elizabeth (37k / 2001 / 3 Maj) from Maersk to Nigerian interests at region US$13.15m. Dry S&P interest remains high despite the vicissitudes of the charter market and several bleak analyses of its future from prominent sources. One example: we have seen 10 buyers inspecting a 2001 blt Supramax. Despite the interest levels, asset prices are now falling as Buyers are unwilling to pay last done one month ago the Torm Bornholm (76k / 2004 / Tsuneishi) and Torm Anholt (74k / 2004 / Namura) were being negotiated with Greeks around US$22m en bloc, now sold to Target Marine at US$19.7m or less. Other deals include Seatraders securing the 8-strong Lanhai mixed fleet at auction in China at a price of US$68m; the fleet consisted of 2x 2010 gearless and 3x 2011 geared 57k dwt supras built at Yangfan, alongside 3x 79.6k dwt blt 2011 at Wujiazui. Chemical Navig8 Chemical Tankers, trading on the OTC in Oslo (CHEMS), this month took the delivery of its 14th IMO II Interline-coated 37,000 dwt chemical tanker from Hyundai Mipo Dockyard. Navig8 made a vociferous stance for interline and marine line-coated ships at the Pareto Oil & Offshore conference in Oslo on September 3 rd, arguing that the coating is well suitable to carry bulk liquid chemicals such as methanol. Growth in methanol carriage is expected to be increased rapidly over the next five years from the Middle East and North America, both of which will export over 10 million tons per annum, predominantly destined for the Far East. Meanwhile, Navig8 Chemical has this month done a sale-leaseback deal with the Norwegian investment company Ocean Yield for eight newbuilding chemical tankers extending over 15 years. The first four vessels of 37,000 dwt IMO II chemical carriers built by Hyundai Mipo Dockyard are scheduled to be delivered in the second and the third quarter of The last four vessels of 49,000 dwt IMO II chemical carriers built by STX Korea are scheduled to be delivered in the first to the third quarter of Gas We have seen a tremendous activity the last couple of weeks in the newbuilding market with a substantial number of newbuilding contracts concluded for VLGCs and Midsize gas carriers. The rush seems to be to secure the last openings for early keel laying and avoid the new IMO NOx Tier III requirement (the NOx Tier III ) and NEW IGC CODE. New building prices remain stable at US$ 51 mill for an average Midsize, US$ 75 mill for a Panamax and US$ 78 mill for a 84 Cbm VLGC. However, further new buildings, like KOTC who just retendered for 2 x 84 Cbm, will be for the new IMO NOx Tier III requirement. (See page 3). 1

2 VLGC VLGC Deliveries and Scrapping US$/month VLGC rates (1 yr TC) 2,300 2, 1,900 1,700 1,500 1,300 1, Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 September has seen a falling Baltic rate for VLGCs, and arbitrage West of Suez not supporting spot freight rates. As in August, we are still seeing significant congestion in India, which is limiting the supply of available vessels. Capesize Capesize- Deliveries and Scrapping Capesize Values US$ Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Capesize Secondhand 5yr k dwt Capesize Secondhand 10yr Capesize rates have had yet a turbulent month, from a weaker start to September we are now seeing a firming rate picture towards the end. Volumes have gradually been increasing out of Brazil, a development we expect to continue through Q4. VLCC VLCC-TCE VLCC Values Back from a downwards trending pattern last month, VLCC rates have seen a stronger September with rates for the TD3 AG-East route climbing up towards WS 63.5 this week. An indicative contango in the oil market during the first part of the month caused some vessels to be taken on time charters with options for storage, whilst we re seeing few of the options being realized. 2

3 Special Report Owners flock to yards as Tier II window closes Yet again, owners looking to secure newbuildings find themselves pressured by regulatory hurdles. September was an active month in the newbuilding market, as the period of owners flocking to yards in time for a 2015 keel laying, started coming to a close. The most notable orders were in the VLGC segment, as three regular VLGCs and six Panamaxes were reported ordered over the past month. The orders come as owners are keen on avoiding the extra costs and technical uncertainties tied to newbuilding orders that comply with Tier III NOx regulations, coming into effect on January 1 st Tier III emission limits are about 75% lower than those set under Tier II. time until Tier III designs would have to be ready, hoping more sufficient data on abatement systems have surfaced by then. Currently, two main methods for compliance have been developed; exhaust gas recirculation and selective catalytic reduction systems. The two methods are still under development for two-stroke engines, with very little test data available to judge the abatement of emissions. The Tier III regulations will apply to all ships equipped with diesel engines of 130kw or more, fitted on vessels which keel has been laid on or after January 1 st. A risk run by owners currently ordering Tier II is that shipyards will be delayed. Should orders miss the allimportant deadline for keel laying, vessels will not be allowed to operate inside the ECA (Emission Control Areas) where Tier III will apply. The incremental cost of building a Tier III compliant vessel is high. For a new VLGC it would currently add around US$1.5m to the purchase price of US$78m, with higher maintenance cost for the remainder of the vessel s life, providing little benefit for owners, except in terms of their environmental footprint. The extra costs and uncertain future aspects are deterring shipyards as well as owners, who will face extra cost in developing new ship designs. At the moment we are seeing shipyards trying to fill up slots as much as possible within the end of the year, to stretch the 3

4 Scrapping Scrap Price Developments US$/ldt Bulk Carrier China Dirty Tanker China Year Dry Bulk Scrapping No of vessels Capesize Panamax Handymax Handysize ytd L&S SnP Matrix US$m NB Resale 5 yr 10 yr 15 yr VLCC 92/94 98/ 78/80 55/ /37 Suezmax 60/66 68/72 55/61 37/40 20/23 Aframax 52/55 53/56 43/ /31 16/18.5 US$m LR2 54/57 55/58 45/ /33 18/20.5 LR1 43/47 46/48 36/38 23/ /13 MR 34/36 35/ /28 15/18 9/11.5 US$m Capesize 44/46 43/46 30/32 16/19 7/9 Panamax 20/23 19/22 15/17 9/10 5.5/6.5 Ultramax 23/25 22/24 16/18 Handy/Supra 20/22 19/21 13/15 7/9 4.5/5.5 x/y x=china Y=Japan/Korea Note: Highlighted boxes indicate actual values in a liquid market, where current implied pricing is favourable Dry Bulk NB Prices (CNPI) Tanker NB Prices (CNPI) Bunker Prices (US$/mt) September average August average Trend Rotterdam IFO Softening Rotterdam MGO Softening Singapore IFO Softening Singapore MGO Softening 4

5 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Interest rates, currencies, PMI US$ LIBOR Interest Rate - Maturity 3 Months Exchange Rates USD/KRW USD/JPY Manufacturing PMI US/China/EU USD/CNY China Manufacturing PMI United States Manufacturing PMI Euro Area Manufacturing PMI USD/CNY Office Oslo Athens Singapore Shanghai New York Address Lorentzen & Stemoco AS Munkedamsveien 45, 0250 Oslo P.O. Box 2029 Vika, 0125 Oslo Norway Lorentzen & Stemoco (Athens) Ltd Leof. Karamanli 25 Voula Athens, Greece Lorentzen & Stemoco Singapore Pte Ltd. 8 Eu Tong Sen Street, #21-98 Office 1 The Central Singapore Lorentzen & Stemoco Shanghai Representative Office Room 2701, Shanghai Central Plaza 381 Huai Hai Zhong Road, Shanghai China Lorentzen & Stemoco AS (New York City) 8 East 41st St 8th Floor New York, NY 17 United States of America +1(212)

6 Reported transactions list - Wet Price US$m Name Size Built Yard Buyer Seller Notes Product 8.00 Serifopoulo 46,700 DWT 1995 HHI Nigerian Interests Eletson Corp STI Highlander 37, DWT 2007 HMD Norden Scorpio Tankers Ice-1A 7.10 Sirius 1 46,300 DWT 1996 IZAR Undisclosed Super Eco Tankers Trading Dirty Posillipo 53,000 DWT 2010 GSI Undisclosed LGR di Navigazione Ice-1A Cenito 53,000 DWT 2009 GSI Undisclosed LGR di Navigazione Ice-1A Maersk Elizabeth 37,000 DWT Maj Nigerian Interests Maersk Tankers AS Maersk Malta 53,200 DWT 2010 GSI Torm Maersk Tankers AS Nord Optimiser 47,400 DWT 2007 Onomichi Chinese Interests Koyo Line Star 1 37,900 DWT 2007 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Sky 37,900 DWT 2007 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Silent 37,900 DWT 2007 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Single 37,800 DWT 2007 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Style 37,900 DWT 2008 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Stone 1 37,900 DWT 2008 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Steel 37,900 DWT 2008 HMD Hafnia Tankers Geden Lines BBHP, Ice-1A Chemroad Vega 34,500 DWT 2003 Shin Kurushima Undisclosed Eiko Maritime SUS CPO Korea 52,000 DWT 2009 HMD Torm Claus-Peter Offen CPO Japan 52,000 DWT 2010 HMD Torm Claus-Peter Offen Aframax Genmar Compatriot 72,700 DWT 2004 Dalian US Interests Gener8 Maritime Trading Dirty Genmar Companion 72,800 DWT 2004 Dalian US Interests Gener8 Maritime Trading Dirty Elia 115,400 DWT 2006 Sanoyas Metrostar Seaarland Shipping 8.50 Varada Lalima 107,200 DWT 1997 Koyo Gulf Petrochem Varada One Pte Auction Astro Antares 98,900 DWT 1996 DSME Bakri Navigation Maran Tankers Coral Sea 105,700 DWT 2003 HHI Yinson Quantum Crude Storage Suezmax Front Splendour 149,700 DWT 1995 Mitsui Ichihara Doehle Danautic Ship Finance International SS due VLCC Energy R 319,000 DWT 2003 Samho US Interests Nord Reederei on subs Power D 319,000 DWT 2003 Samho US Interests Nord Reederei on subs 6

7 Reported transactions list - Dry Price US$m Name Size Built Yard Buyer Seller Notes Handy Heloise 30,700 DWT 2010 Shanhaiguan Canfornav Parakou Shipping Laker, Bank Sale Emilie 30,700 DWT 2010 Shanhaiguan Canfornav Parakou Shipping Laker, Bank Sale 6.90 Oriente Crest 29,700 DWT 2003 Shikoku Chinese Interests NYK Global Bulk Van Orchid 28,300 DWT 2009 Imabari Greek Interests Van Yu Trading Logger 6.80 Kwela 32,500 DWT 2002 Kanda Taylor Maritime Santoku Senpaku Breeze Island 28,400 DWT 2011 Imabari Evalend Shipping Misuga Kaiun 6.00 Lilja Bulker 28,500 DWT 2003 Imabari Vietnamese Interests J Lauritzen 6.20 Eco Vanguard 28,500 DWT 2001 Imabari Tan Binh Austbulk Logger 7.00 Great Morning 28,700 DWT 2004 Shin Kochi Vietnamese Interests Cido Shipping Logger Handymax-Supramax 3.80 Maratha Providence 47,600 DWT 1995 Oshima Kuwaiti Interests Chowgule 8.20 Ocean Chie 52,400 DWT 2003 Tadotsu Tsuneishi Turkish Interests United Ocean 4.25 Santa Fe 53,600 DWT 2001 Imabari Greek Interests Apollo Fund SS Due 3.83 Latmar 52,800 DWT 2001 Onomichi Statu Gemi Kiralama Latmar Denizcilik Auction, SS Due, Poor Cond Lan Hai Dong Feng 57,200 DWT 2010 Yangfan Zhoushan Sea Traders Lanhai Shipping Auction 5.60 Lan Hai Yang Fan 57,200 DWT 2010 Yangfan Zhoushan Sea Traders Lanhai Shipping Auction 9.00 Lan Hai Qian Jin 57,200 DWT 2011 Zhejiang Zengzhou Sea Traders Lanhai Shipping Auction 8.90 Lan Hai Lian He 56,800 DWT 2011 Zhejiang Zengzhou Sea Traders Lanhai Shipping Auction 9.00 Lan Hai Ying Xin 57,200 DWT 2011 Zhejiang Zengzhou Sea Traders Lanhai Shipping Auction 3.80 Simon Schulte 46,500 DWT 1996 Oshima Chinese Interests Schulte Bernhard Rui Lee 56,900 DWT 2011 Hantong AB Maritime Winland Ocean Shipping Auction Tennei Maru 58,700 DWT 2009 Tsuneishi Zhoushan KC Maritime Kambara Kisen 5.50 Aetos 48,900 DWT 2001 IHI Kon-Quest Albamar Auction Skomvaer 58,000 DWT 2010 Yangzhou Dayang Kassian Maritime Asian Bulkers SS Due 3.40 DS Commander 45,500 DWT 1994 Tadotsu Tsuneishi Greek Interests Changsung Shipping 2.80 Brave Royal 44,000 DWT 1994 DSME Bangladeshi Interests Brave Royal Shipping Tennei Maru 58,700 DWT 2009 Tsuneishi Zhoushan KC Maritime Kambara Kisen Panamax-Post PMX 3.20 Newlead Markela 71,700 DWT 1990 Hitachi UAE Interests Newlead 5.70 Eastern View 73,400 DWT 1995 HHI Qatari Interests Josco Geared 9.25 Torm Anholt 74,200 DWT 2004 Namura Target Marine Torm 9.25 Torm Bornholm 76,000 DWT 2004 Tadotsu Tsuneishi Target Marine Torm Lan Hai Xu Ri 79,600 DWT 2011 Nanjing Wujiazui Sea Traders Lanhai Shipping Auction Lan Hai Yang Guang 79,400 DWT 2011 Nanjing Wujiazui Sea Traders Lanhai Shipping Auction Lan Hai Zhao Yang 79,700 DWT 2011 Nanjing Wujiazui Sea Traders Lanhai Shipping Auction 6.90 New Agility 76,600 DWT 2001 Imabari Pan Ocean Hsin Chien United Journey 82,800 DWT 2009 Tadotsu Tsuneishi Thenamaris Kambara Kisen 7.50 Daebo Trader 73,900 DWT 2002 Namura Cyprus Sea Lines Daebo International Court, Poor Cond North Fortune III 91,400 DWT 2000 Oshima Shanghai Zhenhua Shipping NYK Line 5.30 Alpha Glory 72,300 DWT 1999 Imabari Undisclosed Alpha Bulkers 3.70 Star Nicole 73,800 DWT 1997 Sumitomo FE Interests Star Bulk Carriers Capesize Bao Zhu Hai 180,300 DWT 2004 Koyo Winning Shipping Fujian Guanhai Disclaimer: The information contained within this report has been collected from a number of market sources and is given in good faith without guarantee, for information purposes only. Lorentzen & Stemoco and its affiliates, directors and employees are not liable or responsible for any consequences whatsoever occurring from errors or inaccuracy of the information contained within this report. 7