CMA Luncheon 23 February 2012

Transcription

1 CMA Luncheon 23 February

2 The Recycling Market Macro Matters Presented by: Bart Lawrence 2

3 SHIP RECYCLING - LOCATIONS Today s scrap markets (East to West) China, Bangladesh, India, Pakistan, Turkey and the United States 3

4 Ship Recycling Brownsville 4

5 LDT Cost to get there Delivered Value Example: Maximizing Value 10, LDT Ship in San Francisco Delivery value China = $400/ldt Transportation cost China = $50/ldt Distance = 6,044 miles Ship as is value = $350/ldt Delivery value India = $500/ldt Transportation cost India = $100/ldt Distance = 9,791 miles Ship as is value = $400/ldt Transportation costs from the buyers perspective: 1) Fuel costs 2) Crew costs 3) Port costs (both ends) 4) Interest on money 5) Surveys (Tow/Class) 6) Risk / Reward 5

6 Market Concerns What tonnage will be coming to the recycling markets? Will NB deliveries i force out older tonnage and overwhelm the recycling market? What is forcing ships out of the market (i.e. regulations, age, rates, survey position, WW economic conditions, government policies, etc.)? 6

7 Historic Peaks and Trends ( / Asian Financial Crisis / Current) The Market Today Where We Stand Elasticity it of the scrap market Scrap market as a lagging indicator Price vs. Demand (BDA, BDI, and dworld ldeconomics) Looking Ahead Where We Are Going g( (Fleet Stats, BDA, BDI, etc.) Impact of Bangladesh Agenda Conclusions / Recap 7

8 Historic Peaks and Trends mill. LDT mill. LDT mill. LDT mill. LDT Consider /84 abt 7.1 mill. LDT mill. LDT (Historical High) 1986 Decline in LDT Recycled (7.77 mill. LDT) mill. LDT 1988 / 1989 / 1990 Rapid decline to about 1.0 mill LDT per year 8

9 Historic Peaks and Trends Asian Financial Crisis ( ) What was the impact of the crisis on scrapping and did the scrap market help re-balance the overall shipping market? ASIAN FINANCIAL CRISIS ( ): 1998) YEAR vs. LDT SCRAPPED LDT SCRAPPED Series Series2 4,500, ,500, ,200, ,000,000 YEAR 9

10 The Market 1) very elastic as to quantities consumed 2) a lagging indicator 3) Supply of scrap ships is not wholly dependent on price 10

11 The Market Cycle Today 2005/06/07 average of about 2 mill. LDT RECYCLED BDI May 2006: 2,479 May 2009: 1,806 May 2007: 6,521 May 2010: 3,352 May 2008: 11,793 May 2011: 1,480 - Feb 2012:

12 Today s Bulk Carrier Orderbook 12

13 The dry cargo market tells the story Dry recycling statistics In 2008, 2.6 mill. LDT Recycled (more than 2X than each of the prior three years) 376 Dry / Tweens 2008 In 2009, 5.9 mill. LDT Recycled 702 Dry / Tweens 2009 In 2010, 3.9 mill. LDT Recycled 501 Dry / Tweens 2010 In 2011, 6.5 mill. LDT Recycled 787 Dry / Tweens

14 Pricing / BDA Demo prices decreased in 2009 when compared to 07/ 08, not necessarily because of supply, but rather world economic conditions (steel demand, etc). Today, prices are region $500/ldt with a heavy supply. Price Drivers: Internal Demand (importing i countries) Cost of Labor Infrastructure 14

15 Early Expectations for 2012 Asset class deliveries scheduled throughout 2012: - UL/VLCC 71 one delivery ever 5.14 days - AFRAMAX 63 one delivery every 5.79 days - CAPES 306 one delivery 1.19 days - HANDY 399 one delivery every 21.8 hours *These numbers are from early February, 2012 and are subject to slippage/delays. **Estimate a roughly 30% slippage of the orderbook. 15

16 NUMBER OF SHIPS RECYCLED/NB STATS Asset Class Recycled Orderbook Recycled Deliveries Recycled Deliveries Recycled Deliveries UL/VLCC SUEZMAX AFRAMAX CAPE / COMBO PANAMAX As of February 15,

17 FLEET AGING CAPESIZE BC FLEET ESTIMATES (END 2011) 36% years old 13% - 20+years old 51% years old END ,374 TOTAL CAPES 17

18 Bangladesh Influencing the market? 18

19 Conclusions It seems clear that the scrap market has the ability to absorb the tonnage needed to help rebalance the greater shipping markets. Other market conditions at work are: labor, steel demand, d exchange rates, politics, i budgets, and electricity/gas shortages. 19

20 We have a great number of ships that should come to the market The market is elastic enough to absorb the tonnage The prices we pay for scrap ships will not determine what comes to the market it will be the other way around RECAP 20