International Shipping: Global Supply & Demand Trends

Transcription

1 International Shipping: Global Supply & Demand Trends Presentation to F.D.A Andersen Alumni in Greece June 27, 2017

2 Navios Group Structure Navios Maritime Holdings Inc. (NYSE: NM) Controls 66-vessel dry bulk fleet; 40 owned and 26 long term chartered-in vessels Global brand; Flexible business model Stable cash flow from charter out contracts and distributions from subsidiaries 20.9% 6.7% 46.1% 63.8% Navios Maritime Partners L.P. (NYSE: NMM) MLP - 35 vessels 12 Capesize, 14 Panamax, 2 Ultra Handymax & 7 Containers NM ownership: $56.6 million market value Navios Maritime Acquisition Corporation (NYSE: NNA) 36 vessels - 26 product tankers, 8 VLCCs, 2 chemical tankers leading company in tanker sector NM ownership: $117.5 million market value Annual dividend: $0.20; 12.4% yield Navios South American Logistics Inc. Logistics operator in Hidrovia Core operations: Port Terminal facilities, barging & cabotage 40.0% 59.0% Navios Maritime Containers Inc. (Oslo OTC NMCI) $50.0 million initial capitalization (private placement - Oslo - OTC) Initial Target 14 Container vessels Navios Maritime Midstream Partners L.P. (NYSE: NAP) MLP - 6 VLCCs; Long-term charters in tanker midstream sector Options on 3 VLCC dropdowns provide built-in fleet & distribution growth Market value of NNA share: $138.7 million Annual dividend: $1.69; 15.4% yield Note: All stock prices and yields as of May 19,

3 Navios Group Navios Across the World Antwerp, BL New York, NY Monaco Piraeus, GR Singapore Corumba, BR Asuncion, PY Montevideo, UR Nueva Palmira, UR Buenos Aires, AR 3

4 Navios Group Track Record of Fleet Growth Fleet Growth - Controlled Fleet (1) Navios Group is composed of Navios Holdings (NM), Navios Partners (NMM), Navios Acquisition (NNA), Navios Midstream (NAP), Navios Logistics fleet (owned by NM) and Navios Europe I and Navios Europe II fleet 4

5 Navios Group The Shipping Industry Dry Bulk Tankers Containerships LPG LNG Drill ships 5

6 Navios Group International Shipping: Statistics International Shipping Transports 90% of world trade volume ~ 50,000 vessels used for transporting goods Safest and friendliest means of transportation Value creation Industry $250 billion shipping revenues generated annually >6% contribution in world GDP 13.5 million shipping employees worldwide 2 million seamen employed in international shipping industry Multinational crews Officers mainly from developed countries Crew members mainly from developing countries Strict international safety and quality regulations Shipping industry regulated from International Maritime Organization (IMO) Crew training worldwide based on specific uniform standards 30+ International Agreements define strict crew regulations 6

7 Navios Group Greek Shipping: Basic Facts As of December 2015, Greek-controlled fleet represented: 8.2% of worldwide fleet 33% of European controlled fleet Combined average age of Greek fleet: 7.7 years Greek controlled fleet increases >5% per year since 2005 Greece has the biggest controlled fleet in the world (2 nd Japan, 3 rd China and 4 th Germany) Shipping accounted for 4.9% of Greek GDP in 2014 and increased to 5.7% in 2016 Currently there are around 1,200 shipping companies based in Greece giving employment to over 40,000 onshore employees Shipping and shipping related companies employ over 180,000 employees 7

8 CONFIDENTIAL DO NOT DISTRIBUTE World GDP Growth % IMF Latest Revisions of GDP Growth (%) World GDP January April Advanced economies GDP January April Emerging markets GDP January April Source: IMF, April

9 Seaborne Trade Development Total seaborne trade has grown at about 4% CAGR from 1.0 billion tons in 1957 to an expected 11.5 billion tons in 2017 Seaborne trade has been affected by oil embargoes, financial crises, containerization and the significant growth of China during that period 14 Seaborne Trade Development World Seaborne Trade Drybulk; 5,052 44% Oil 3,065 27% Other dry 857 7% Containers 1,806 16% Chem&Gas 676 6% 0 Dry Bulk Oil Gas+Chem Container Other Dry Source: Clarksons 9

10 World Fleet Growth Fleet growth is usually steady driven by economic growth and the replacement of older tonnage but demand shocks and other macro economic trends and events lead to rapid increases in building new ships For example, tanker deliveries (red below) expanded rapidly as a result of the first oil shock in 1973 and more recently due to worldwide growth led by China and the phase out of single hull tankers Chinese economic expansion (including housing and infrastructure booms) also led to significant dry bulk deliveries (dark blue below) from 2009 until recently Containerization led an expansion of the other types of ships delivered since 1995 Source: SSY, IHS 10

11 CONFIDENTIAL DO NOT DISTRIBUTE Drybulk Industry Overview

12 Provisional Provisional Navios Group World Dry Bulk Trade Dry bulk markets depend on GDP and Industrial Production growth. Dry bulk demand is also affected by macroeconomic events such as: Oil embargo of 1979 which caused a rapid increase in coal fired electricity production and China s industrialization and urbanization after it joined the WTO in 2001 China is still currently driving dry bulk demand as that country accounts for over 70% of all seaborne iron ore and significant amounts of coal, grain and other dry bulk commodities China admitted to the WTO 5.6% Berlin wall falls 2.6% 1.7% Source: Drewry Shipping Consultants Ltd. 12

13 Drybulk Trade Segmentation In 2017 dry bulk trades are expected to be divided as follows: 29% iron ore, 23% coal, 10% grain and 38% other. The three main cargoes account for over 62% of the total Dry Bulk Market Segments (million tons) Minor bulk MT 38% Grain 499 MT; 10% Iron Ore MT 29% Coal MT 23% Source: Clarksons 13

14 (million tons) Billions CONFIDENTIAL DO NOT DISTRIBUTE Urbanization Drives Demand for Iron Ore China's urbanization will continue to grow % 76% Chinese population is currently ~1.4 billion Urban population is expected to reach 76% by 2050 ~150 million people expected to move to urban areas between Urban Rural Chinese Iron Ore Imports World Seaborne Iron Ore Trade F 1,200 1, P CAGR = 12% F Million tons 2016P YoY% Δ MT 2017F YoY% Δ MT Total World Trade 1, % 46 1, % 75 Of which: Australia % % 31 Brazil % % 35 Source: National Bureau of Statistics, Citibank Commodity Weekly Report, GTIS, Forecasts: Clarkson Dry Bulk Trade Outlook Apr

15 (million tons) CONFIDENTIAL DO NOT DISTRIBUTE Chinese and Indian Coal: Production and Imports Chinese plus Indian Seaborne Coal Imports CAGR = 18% Growth = 7% Combined Chinese and Indian coal imports forecast* for 2017 is for relatively stable imports Chinese Mar 2017 imports up 26% YoY Indian coal-fired power generation capacity Sources: Clarksons, GTIS, Coal India Ltd., Citi bank (Chinese domestic coal production and forecast) Chinese and Indian coal production figures are provisional; Chinese imports include lignite *YTD: China through March, India through February 15 *Forecasts: Clarksons Dry Bulk Trade Outlook Apr 2017 (coal production is annualized)

16 CONFIDENTIAL DO NOT DISTRIBUTE Protein Consumption Increase Drive Chinese Imports Seaborne Grain Trade* P CAGR = 5.9% Chinese soybean imports will grow 34% from 2017 to 2027 as protein becomes a larger portion of the Chinese diet China currently accounts for 62% of worldwide soybean trade Argentina, Brazil and the U.S. account for 87% of all soybean exports Soybean ton miles have grown at 8% CAGR from 2009 to 2016 Grain/soybean shipments are sensitive to delays through operational inefficiencies and weather delays increasing demand for ships Soybeans are used for livestock feeding: it takes 7-8 kg of grain to produce a kg of beef USDA Soybean Import Forecast to 2026 Sources: Clarksons, FAO, USDA 16

17 Fresh Water Availability vs. Population: Grain Exports = Virtual Water Trade Water requirement equivalent of main food products North & Central America Europe Asia Product Unit Equivalent water in m3 per unit 15% 8% South America 26% 6% 8% 13% 36% Africa 11% 13% % of Global Water Supply % of Global Population 60% Australia & Oceania 5% <1% Fresh beef kg 15 Fresh lamb kg 10 Fresh poultry kg 6 Cereals kg 1.5 Citrus fruits kg 1 Palm oil kg 2 Puls, roots and tubers kg 1 This table gives examples of water required per unit of major food products, including livestock, which consume the most water per unit. Cereals, oil crops, and pulses, roots and tubers consume far less water. Source: SIWI and IWMI, 2004 Global Virtual Water Imbalances Will Continue to be a Driver of Agricultural Trade Source: Web site of the UNESCO/IHP Regional Office of Latin America and the Caribbean 17

18 CONFIDENTIAL DO NOT DISTRIBUTE Dry Bulk Net Fleet, Age Profile + Historical Scrapping 900 Fleet Size in DWT YTD Deliveries Scrapping Net Fleet Growth Year Actual Projected % non-delivery Year DWT % of fleet Year % of Fleet Fleet period end Apr YTD 20.4 M 34.6 M 41% - preliminary YTD 6.9 M 0.9% YTD 1.8% M M 92.7 M 49% M 3.9% % M M 85.1 M 42% M 4.0% % M M 75.1 M 36% M 2.3% % M M M 38% M 3.4% % M M M 28% M 5.4% % M M M 27% M 4.3% % M M M 35% M 1.4% % M Source: Clarksons; Unless noted, all data in DWT, YTD through 5/16/17 18

19 CONFIDENTIAL DO NOT DISTRIBUTE Tanker Industry Overview

20 World Tanker Trade Oil demand correlates highly with world GDP growth and is also affected by OPEC led attempts to control oil prices such as the embargoes in 1973 and 1979 and the 2014 effort to increase market share Current crude oil demand growth is concentrated in the Pacific Basin and most of the new crude sources are in the Atlantic Basin creating large increases in vessel demand to travel longer distances Product demand depends on refinery output and the difference in prices between areas with new refineries in the East supplying demand in traditional Western consumption regions Tanker demand growth can thus be higher than the commodity demand growth as distances to end markets increase Seaborne Oil Trade Source: Clarksons 20

21 Tanker Trade Segmentation Oil tankers are divided into two categories: those that carry crude oil and those that carry oil products Oil products are the result of putting crude oil through a refinery In 2017, tanker trade volumes are expected to be divided as follows 53% crude oil, 29% products and 18% chemicals and gas Tanker Market Segments Tanker Types and Trades Chem/Gas 676 MT 18% Refined Products MT 29% Crude oil MT 53% Source: Clarksons Crude Oil Products Chemicals+Gas 21

22 Crude Market Overview 22

23 Global Oil Demand: Growth Continues Global oil demand is driven by GDP The IMF projects global GDP growth of 3.5% for 2017, that represents a 0.1% increase over October 2016 projection and 3.6% for 2018 Global oil demand rose by 1.7% (1.6 mb/d) in The IEA projected 2017 demand to increase by 1.4% or 1.3 mb/d In 2016, the IEA increased its 2016 global oil demand projection five times Lower oil prices are a positive factor for oil demand Global Oil Demand ( ) (mm b/d) 36 Year Global Oil Demand and GDP Growth Source: International Energy Agency April, IMF April 2017, The Economist. 23

24 Growing Chinese Consumption: Significant Fleet Increase Chinese Crude Oil Imports ( ) Energy per Capita by Region as a Proportion of the US 13% CAGR Jan 09 to Apr 17 Current Chinese per capita oil consumption is 3.2 barrels per year Chinese crude imports reached a record 9.2 MBPD in March 2017 up from 2016 average of 7.6 MBPD Per Capita Ratios: US/China 6.9x Europe/China 3.1x World/China 1.5x China consumption goes to: Additional mbpd Additional VLCC (1) US per capita usage ,220 Europe per capita usage ,170 World per capita usage (1) Assuming 90 days VLCC roundtrip and all additional crude is imported by sea Source: Drewry, Clarksons, US Census, BP Statistical Review 2016, BP Energy Outlook 2017, Citibank. 24

25 Asia is the Dominant User of VLCC Vessels Oil supply volume to China increased from AG, West Africa, South America and Caribs 2001 to 2014 Tons shipped from WAfr + S America requires more ships due to the longer trade distance Miles moved per ton transported to China (1) : Arabian Gulf 5,500 t m West Africa S America 9,650 t m 11,500 t m Source: Drewry, IEA MTOM Report Feb 2015, Clarksons (1) Average ton miles based on 2014 tons transported to China. (2) East / West based on whether discharge port is East or West of Suez 25

26 VLCC Net Fleet, Age Profile + Historical Scrapping Fleet Size in DWT YTD Source: Clarksons; Unless noted, all data in DWT, YTD through 5/8/17 except non-deliveries Deliveries Scrapping Net Fleet Growth Year Actual Projected % Non-Delivery Year DWT % of Fleet Year % of Fleet Fleet Period End Apr YTD 5.8 M 8.7 M 34% - preliminary YTD 0.6 M 0.3% YTD 2.6% M M 22.3 M 36% M 0.3% % M (2) M 9.1 M 31% M 0.6% % M M 10.2 M 25% M 2.2% % M M 17.8 M 47% M 3.5% % M M 23.0 M 33% M 2.7% % M M 29.1 M 34% M 4.2% % M M 27.8 M 40% M 7.7% % M (1) Total Orderbook as of May 8, 2017 = 30.4 million DWT or 14% of the fleet (2) Includes 2 TMT VLOCs reclassed as VLCCs 26

27 Product Market Overview

28 Refinery Capacity Shifting to Asia and Middle East According to the IEA, refinery capacity is expected to increase by 10.3 million barrels per day (MBPD) for the period ; About 74% of that capacity will be added in the broader Asia and Middle East regions. For the same period the IEA expects OECD capacity to increase by about 0.5 MBPD with new US and European capacity increasing (0.3 MBPD each) while OECD Asia/Oceania continues to close capacity (loss of 0.1 MBPD). OECD Americas refining is expected to increase by about 0.3 MBPD; almost all of the additions are in the US New low-cost Asian and Middle Eastern capacity is still forcing closure of old high-cost OECD capacity, structurally favoring more long-haul products trade. Refining Capacity Additions ( ) 2016 Global Oil Consumption Source: IEA MRS March 2017 Source: IEA OMR January

29 World Product Supply Imbalances = Arbitrage Possibilities Product transportation is driven by regional refinery output differences, regional needs and development Product Supply Balances 2016 and 2022 (thousand barrels per day) North America Europe FSU Latin America Middle East Asia gasoil/kerosene gasoline/naphtha Africa fuel oil Source: IEA MRS March

30 Are Driving Product Tanker Ton Mile Demand Crude Oil and Refined Products Ton Mile development Billion Ton Miles Refined products Crude oil 15,000 12,000 9,000 6,000 3,000 9,792 10,160 10,462 10,598 10,945 10,851 11,361 11,301 11,731 11,964 12,468 13, % CAGR P 2013P 2014F 2015F Major seaborne refined products trades existing and prospective Refined Products Seaborne Ton-Mile Growth Product tanker trading patterns changing: Exports from USG to South America, Europe and USEC Favoring MR vessels M East - India exports to Atlantic (N America Europe) Favoring LR vessels Caribbean N. America Gasoline Naphtha Gas oil N. America Europe Diesel N. America L. America N. Europe N. America Gasoline Europe M. East Gasoline Naphtha Gas oil Diesel M. East Europe Gas oil Jet Fuel M. East N. America M. East F. East Naphtha M. East N. Europe S. Korea Japan Gas oil Gasoline Intra Asia Gas oil Naphtha M. East & India U.S. West Coast Source: Drewry Existing trade patterns Prospective trade patterns 30

31 Product Tanker (1) Net Fleet, Age Profile + Historical Scrapping 160 Fleet Size in DWT YTD Deliveries Scrapping Net Fleet Growth Year Actual Projected % non-delivery Year DWT % of fleet Year % of Fleet Fleet period end YTD 2.9 M 5.1 M 43% - preliminary YTD 0.3 M 0.2% YTD 1.8% M M 12.9 M 27% M 0.6% % M M 13.9 M 37% M 1.0% % M M 9.8 M 33% M 1.4% % M M 8.3 M 36% M 2.0% % M M 10.1 M 42% M 2.7% % M M 14.4 M 52% M 2.3% % M M 18.0 M 39% M 4.5% % M Unless noted all data in DWT; YTD through 5/1/17; Source: Clarksons May 2017 (1) Product tankers defined as all coated tankers above 25k dwt plus uncoated 25-85k dwt tankers including IMO 2/3 with avg tank size > 3k cbm, excluding stainless steel and specialized tankers (2) Total Orderbook as of beginning May 2017 = 14.4 million DWT or 9% of the fleet 31

32 CONFIDENTIAL DO NOT DISTRIBUTE Container Industry Overview

33 Navios Maritime Containers Inc. World Container Trade World Seaborne Container Trade and Tonne-miles ( YTD) Million tonnes traded 2,000 Tonne miles in billions , , , , , `00 `01 `02 `03 `04 `05 `06 `07 `08 `09 `10 `11 `12 `13 `14 `15 `16 `17 e 0 Container shipping has historically been one of the fastest growing shipping segments Source: Clarksons Platou Securities AS, Shipping Intelligence Network 33

34 CONFIDENTIAL DO NOT DISTRIBUTE World Container Trades Breakdown and Growth US and Europe accounted for 29% of world s container traffic in 2015 the Mainlane trade Intra-regional trade surpassed Mainlane trade in 2007 and has been growing faster ever since From 2007 to 2015 Mainlane trade has grown at a 1% CAGR and the Intra-regional trade grew at a 5% CAGR Intra-Asia trade is the largest portion of the Intra-regional trade and has been the principal growth driver expanding at a 5.9% CAGR Global Container Trade Composition Intra-Regional Container Trade Composition 34 Source: Clarksons

35 Navios Maritime Containers Inc. Deployment & Fleet Capacity: Sub-10k TEU Vessels Needed Sub-10k TEU Containership Sailings Last Month Total Fleet vs Idle Fleet & Orderbook Million TEU 10k+ TEU Containership Sailings Last Month Limited idle capacity and orderbook emphasizes that there is still a need for existing smaller tonnage 2 1 Smaller vessels are key to many trade lanes that larger vessels cannot service 2 Idle fleet and orderbook cannot replace existing smaller vessel capacity Source: Clarksons Platou Securities AS, Clarksons SeaNet 35

36 CONFIDENTIAL DO NOT DISTRIBUTE Container Net Fleet, Age Profile + Historical Scrapping 22,000 20,000 Fleet Size in TEU 18,262 19,744 19,991 20,072 18,000 16,000 14,224 15,344 16,257 17,147 14,000 12,000 10, YTD Deliveries Scrapping Net Fleet Growth Year Actual Projected % Non-Delivery Year TEU % of Fleet Year % of Fleet Fleet Period End Apr YTD 337 K 759 K 56% YTD K 1.3% YTD 0.4% 20,072 K K 1,341 K 33% K 3.3% % 19,991 K ,678 K 1,889 K 11% K 1.1% % 19,744 K ,490 K 1,624 K 8% K 2.2% % 18,262 K ,346 K 1,840 K 27% K 2.7% % 17,147 K ,262 K 1,578 K 20% K 2.2% % 16,257 K ,214 K 1,652 K 27% K 0.6% % 15,344 K ,392 K 2,243 K 38% K 1.0% % 14,224 K Source: Clarksons; Unless noted, all data in TEU; YTD through 5/16/17 36

37 Navios Maritime Containers Inc. Supply and Demand Balance Monthly Supply and Demand Growth (y-y) Supply has steadily outpaced demand since 3Q16 In Q12017: 6% trade growth vs. 0.8% fleet growth Source: CTS, Clarksons Research Services, Clarksons Platou Securities AS 37

38 Containership Sector Clarkson Research