Monthly S&P Report. Chemical. Crude HIGHLIGHTS. Gas. Dry. Hot Hulls. May Crude: Buyers adopt wait-andsee. Dry: Some assetplay

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1 May 2015 Monthly S&P Report HIGHLIGHTS Crude: Buyers adopt wait-andsee approach Dry: Some assetplay activity Chemical: Firming clean market trickling down to chemical rates Gas: High newbuilding prices possible deterrent for buyers Hot Hulls Crude Sunny skies persist for the crude tanker market, spurring a fair bit of interest, if not necessarily activity, in SNP. Asset prices are relatively high, and many Owners remain skeptical about buying in such circumstances, given the potential volatility of the market. Recent sales include the en bloc sale of the VLCCs Universal Queen and Universal Crown (2005 built HHI) to South Korean interests at around US$98 million including TCB. Dry The charter market continues to be dismal, with market fundamentals providing little support for optimism; SNP activity is relatively low with the exception of a few cash rich asset-players actively looking to capitalise on low prices, mostly in the Panamax segment. Recent sales include the 2008 Japan built Lowlands Queen (76,000 dwt), sold at US$15.3 million, and the 2004 Japan built Million Trader (76,000 dwt), sold at US$9.3 million, both to Greek interests. Chemical Freight rates for chemical tankers strengthened in May on the back of a firming clean market. Owners of chemical tankers were able to command higher rates, following LRs and MRs increasing earnings for carriage of petroleum products. Particularly the chemical tanker trade from Houston to Rotterdam continued gaining ground. Asia-bound shipments also ticked up, although the market is still marked by ample supply of tonnage. At current 19,000 dwt stainless steel chemical carriers are attracting around US$15,000 per day on a 12-month timecharter contract, a slight improvement from April. Noticeable sales for chemical tankers this month have involved the IMO II stainless steel tanker Fairchem Filly of 19,000 dwt built 2007 in Japan. The IMO I Medkem Four of 4000 dwt built in Denmark has also changed hands, utilized for coastal trading. In addition, the 13,000 dwt Nordic Oslo built 2005 has reportedly been sold from Nordic Tankers to South Korean interests. Finally, the Nautilus, an epoxy coated IMO II of 43,000 dwt, has reportedly been sold from Marflet to Turkish interests. Gas Inquiries have been made both for LPG and LNG ships in the past month, with some of these resulting in actual sales. The VLGC sector continues to see some buying interest, but high values relative to newbuilding prices is a possible deterrent. The Gas Scorpio (78,500 cbm, built 1995) was sold from NYK to Trong Pat Loc, Vietnam for US$39 million. The demolition market recorded the sale of the Sea Pride Eth/LPG (10,500 cbm, 1991 built) to Indian scrap buyers. In the LNG market two transactions were concluded. The LNG Swift (127,500 cbm, built 1989) was sold from NYK to Sinokor for US$20.5 million. Furthermore, the LNG Abuja (126,500 cbm, built 1980) was sold from Nigeria LNG to Golar LNG for US$20 million. 1

2 VLGC VLGC Fleet Deliveries and Scrapping VLGC Values (82/84 kcbm) Rates are still going strong both East and West of Suez. Time charter earnings on VLGCs have seen rates increasing by more than 20% compared to last month, especially due to high volumes coming out of the US and Middle East. Some congestion in both Houston and at delivery in India is helping to keep rates high. Dry Bulk Dry Bulk Fleet - Deliveries and Scrapping Capesize Values Some welcome positive movement in freight rates saw the BDI climb by 7% in one day, up to 634 points in the middle of May. The BDI lost some momentum in the third week of May, falling back to 588. Rates are still at low levels, with Capesizes rates still below operating cost. VLCC VLCC - Deliveries and Scrapping VLCC Values VLCC freight rates saw a spike in mid-may, climbing to WS72 equalling a TCE of around US$54,650. The market remains strong, as seasonality does not seem to have kicked in with its usual force during the past months. 2

3 Special Report oil products in China changing trade The narrative of the tanker recovery story has been heavily dominated by the growth in Chinese crude oil demand. Refinery expansions adding 600,000 bpd of capacity last year (placing the country third globally after the US and EU), are together with falling growth in domestic consumption increasing Chinese oil product output and exports, causing demand for crude oil to reach new heights. Seaborne trade of oil products to China (mostly from other Asian countries) has been decreasing every year since 2011, as imports are being replaced by crude oil and domestic refinery capacity. Product imports totaled 7.8 million tons in Q1 this year, seeing an annual decrease of 20% over the past four years. With Chinese refinery capacity rising (now totaling around 14 million bpd), and domestic consumption slowing down, a supply-demand overhang is leading to increasing exports to other parts of Asia. Rising since 2012, total exports in 2014 totaled 18.7 million tons dominated by diesel, gasoline and kerosene. Chinese crude oil imports rose by 5.4% year on year in April, as refinery throughput increased by 6.9% over the same period. Customs data show that China exported more than double its initial limit of gasoline, jet-fuel, diesel and naphtha in 2014, totaling 19.6 million tons. As the Chinese economy transitions from being investment driven to focusing on consumption, domestic demand for diesel from the industry and construction sectors is falling. According to traders, it would be no surprise if the country s May exports of gasoline surpassed the 415,000 tons exported during the same month last year. The Chinese Government allocates export quotas for oil products to state-run refineries after domestic demand have been assessed. The initial limit in 2015 has recently been raised by Beijing. Coupled with additions to refinery capacity in the Middle East coming online, the product market might be looking at a possible supply glut pushed further by Chinese export volumes, driving down fuel prices. Cheaper 3 crude prices are also increasing margins for Chinese refiners, which are likely to apply for expansion of quotas once the initial limit is reached. Sinopec, CNOOC and PetroChina were given an export quota of 9.75 million for Q1 2015, an increase of 20% from the initial limit in Changing quota regulations are also likely to keep increasing product output, as so-called teapot refineries, which make up one third of national crude oil processing capacity, are now being allowed to import crude oil from abroad. Declining import of oil-products to China has the potential of hurting short haul trade for clean tankers within the region, whilst increasing long haul exports of crude oil to Chinese refineries should provide further support for VLCC rates as demand strengthens going ahead.

4 Scrapping Scrap Price Developments Dry Bulk Scrapping Source: AXS/L&S Research Newbuilding Prices (China) NB Prices Dry Bulk Apr-15 Mar-15 Feb-15 Trend Newcastlemax Softening Capesize Softening Kamsarmax Softening Panamax Softening Ultramax Firming Handysize Softening Tanker VLCC Softening Suezmax Softening LR Softening LR Firming MR Firming Dry Bulk NB Prices (China) Tanker NB Prices (China) Bunker Prices (US$/mt) May to date April Trend Rotterdam IFO Firming Rotterdam MGO Firming Singapore IFO Firming Singapore MGO Firming 4

5 Interest rates, currencies, PMI US$ LIBOR Interest Rate - Maturity 3 Months Exchange Rates Manufacturing PMI US/China/EU 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 United States of America +1(212)

6 Reported transactions list - Wet Price US$m Name Size Built Yard Buyer Seller Notes Product 8.3 Kandilousa 46,700 DWT 1995 HHI Undisclosed Eletson Corp 8.5 Iver Expert 45,800 DWT 1997 Halla Sinochem Vroon BV 25.5 Eships Falcon 51,200 DWT 2010 SLS UACC Eships 35.5 Marlin Amber 50,000 DWT 2015 GSI M Sea Capital Trafigura 5y $16k/d 35.5 Marlin Amethyst 50,000 DWT 2015 GSI M Sea Capital Trafigura 5y $16k/d 53.5 *Hull 1651* 74,000 DWT 2015 STX Prime Tanker Management Navig8 Product Tankers Resale 53.5 *Hull 1652* 74,000 DWT 2015 STX Prime Tanker Management Navig8 Product Tankers Resale 53.5 *Hull 1657* 74,000 DWT 2016 STX Prime Tanker Management Navig8 Product Tankers Resale 53.5 *Hull 1658* 74,000 DWT 2016 STX Prime Tanker Management Navig8 Product Tankers Resale 21.8 Abram Schulte 72,700 DWT 2004 Samsung Union Maritime Schulte Bernhard 37.5 Emerald Summit 74,500 DWT 2013 STX Unknown Greek Quantum Pacific Shipping 8.4 Sporades 66,900 DWT 1993 HHI Unknown Greek Eletson Corp Aframax 28.0 Texas Star 115,300 DWT 2003 Sanoyas Yinson Holdings Atlas Maritime Conversion 58.5 *Hull 5402* 114,900 DWT 2015 Daehan Scorpio Tankers Flagship Marine Ventures LR2, Resale 59.5 *Hull 3078* 115,000 DWT 2015 Sungdong Scorpio Tankers Navig8 Product Tankers LR2, Resale 59.5 *Hull 3079* 115,000 DWT 2015 Sungdong Scorpio Tankers Navig8 Product Tankers LR2, Resale 59.5 *Hull 3094* 115,000 DWT 2015 Sungdong Scorpio Tankers Navig8 Product Tankers LR2, Resale River Pride 105,500 DWT 2007 Sumitomo Minerva Marine Excel Marine LR Stavanger Prince 109,400 DWT 2002 Dalian New Yard Avin International DSD Shipping LR2 Suezmax 55.5 Ariadni 166,100 DWT 2009 Hyundai Samho Delta Tankers Liquimar Tankers VLCC Universal Crown 309,400 DWT 2005 HHI Sinokor HMM Incl TCB 98.0 Universal Queen 309,400 DWT 2005 HHI 79.0 Beijing Sunrise 321,300 DWT 2009 Daewoo China VLCC Sinokor 86.0 Dalian Glory 301,900 DWT 2011 IHI China VLCC Sinokor 34.5 Olympic Hawk 306,300 DWT 2000 HHI Oriental Shipping Investments Olympic Shipping 6

7 Reported transactions list - Dry Price US$m Name Size Built Yard Buyer Seller Handy 2.7 Pontoklydon 28,500 DWT 1992 Imabari Chinese Interests Ocean Freighters Ltd 2.6 Birch 5 26,500 DWT 1997 GSI Chinese Interests Woodstreet Inc 9.5 Young Spirit 31,900 DWT 2005 Hakodate Dock Italian Interests Sato Steamship Co 9.5 Verdant Island 32,100 DWT 2006 Hakodate Dock Dabinovic Shikishima Kisen 6.8 Hui An Hai 30,400 DWT 2010 Chengxi Undisclosed COSCO Tianjin 6.8 Fu An Hai 30,000 DWT 2010 Chengxi Undisclosed COSCO Tianjin 8.9 Glorious Sunrise 28,400 DWT 2007 Shimanami Vietnamese Interests Shikishima Kisen 6.5 New Sailing Star 32,900 DWT 2010 Zhejiang Zhenxing Eddie Steamship COSCO Hunan 4.4 Super Challenge 28,600 DWT 1996 Tadotsu Tsuneishi Chinese Interests Stove Rederi AS 4.3 Birch 4 25,400 DWT 2000 Imabari Undisclosed Woodstreet Inc 3.8 Sanaga 28,200 DWT 1998 Bohai Undisclosed John T Essberger Dry Cargo 3.7 Dobrota 29,300 DWT 1996 Tianjin Xingang Beyaz Denizcilik Ltd Sti Dabinovic 3.0 Med Bridge 28,500 DWT 1990 Imabari Fujian Mainstar Shipping Med Maritime Ltd Handymax-Supramax 14.2 Hudson Trader II 58,100 DWT 2009 Tsuneishi Zhoushan Nomikos AM Nisshin Shipping 4.2 Kyriakos 44,800 DWT 1995 Halla Phoenix Shipping and Trading Epidaurus 14.2 Front Runner 56,000 DWT 2009 Mitsui Tamano Nomikos AM Daiichi Chuo 13.6 CMB Jialing 55,100 DWT 2010 NACKS Nomikos AM Bocimar 3.8 Fany 43,600 DWT 1994 Tadotsu Tsuneishi Chinese Interests Changsung Shipping 7.2 Coposa 46,500 DWT 2002 Oshima Transbulk Management Kotobuki Kaiun 11.7 Lan Hai Chuang Ye 56,800 DWT 2011 Yangfan Zhoushan Chinese Interests Guangdong Lanhai Shipping 11.7 Lan Hai Tuo Zhan 56,800 DWT 2011 Yangfan Zhoushan Chinese Interests Guangdong Lanhai Shipping 4.1 Colchester Castle 45,300 DWT 1996 Jiangnan Changxing Glory Ship Management Pte Navalmar UK 13.7 Gypsum Centennial 49,300 DWT 2001 Hyundai Mipo CSL Group USG Corp 28.3 Gypsum Integrity 47,900 DWT 2009 EISA Algoma Central Corp USG Corp 3.4 Zenovia 43,600 DWT 1992 Tsuneishi Zosen Undisclosed Changsung Shipping 3.8 Orchid Ocean 45,300 DWT 1994 Shin Kurushima Ujina Glory Ship Management Pte Shipping Allied Corp. Panamax-Post PMX 15.3 Lowlands Queen 76,600 DWT 2008 Imabari Greek Interests Santoku Senpaku 9.5 Domina 74,000 DWT 2007 Jiangnan Changxing Undisclosed Oak Maritime 9.3 Million Trader 76,300 DWT 2004 Tsuneishi Zosen Avin International Nisshin Shipping 12.5 Medi Singapore 75,400 DWT 2006 Universal MG Shipping Orange Bootes 5.5 Tiara Globe 72,900 DWT 1998 Hudong Zhonghua Chinese Interests Globus Maritime 10.8 Rose Atlantic 75,700 DWT 2005 Sanoyas Astra Shipmanagement Kyokai Kaiun 3.6 GH Prosperity 70,300 DWT 1997 Sanoyas Hengfa Shipping Great Harvest 12.2 Dewi Laksmi 76,000 DWT 2011 GSI Sea Traders Grand Bulk Shipping 13.5 Syriotissa 87,100 DWT 2006 IHI Korean Interests Third Millenium Shipping 18.1 Torm Island 82,800 DWT 2010 Tadotsu Tsuneishi Diana Shipping Shikishima Kisen Capesize 25.0 C Prosperity 175,600 DWT 2011 Jiangsu Rongsheng Zodiac Maritime CMES 18.2 Jiang Jun Shan 176,900 DWT 2006 Namura Winning Shipping Fujian Guanhai 43.5 SBI Habano 180,000 DWT 2015 Sungdong Undisclosed Scorpio Bulkers 27.0 Blue Everest 180,100 DWT 2010 Daehan Thenamaris Blue Marine 43.0 SBI Belicoso 180,000 DWT 2015 SWS Diana Shipping Scorpio Bulker 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