Freight market and coal imports by India

1. Freight market and coal imports by India 4th International Conference on Coal market in India Nazneen Fatima Sr. Research Analyst fatima@drewry.co.uk 22 August 2014

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3. Agenda

4. Global Dry bulk trade and demand for dry bulk fleet Coal is the second-largest dry bulk commodity transported via sea Dry fleet development Dry bulk trade Dry bulk fleet supply /demand Source: Drewry Maritime Advisors

5. Global dry bulk fleet development Dry bulk fleet growth has declined as compared with 2011 and 2012 amid lower deliveries Capesize fleet growth • Total dry bulk fleet is expected to grow around 5% annually in coming five years • Capesize fleet growth, which was more than 25% in 2011, has finally come down and expected to decline further by 2019 • Post Panamax fleet growth is likely to pick from 2016 onwards VLOC fleet growth Post Panamax fleet growth Source: Drewry Maritime Advisors

6. Global dry bulk fleet development cont.. Fleet growth of smaller segments such as Supramax and Handysize vessels below 5% Panamax fleet growth • Fleet growth rate in smaller segment is on lower side amid low ordering in last couple of years • Panamax vessels fleet growth was around 14% during 2012, which has come down and expected to decline significantly by 2016 Handysize fleet growth Supramax fleet growth Source: Drewry Maritime Advisors

7. Dry bulk newbuilding ordering and scheduled deliveries Dry bulk orderbook has declined amid lower orderings in last couple of years Total dry bulk orderbook • Total dry bulk orderbook is around 19% of the existing fleet and 4.6% of orderbook is scheduled for delivery in 2014 • The Capesize orderbook is around 18% of the existing fleet, and only 3% of which are scheduled for delivery in 2014 VLOC orderbook Capesizeorderbook Source: Drewry Maritime Advisors

8. Dry bulk newbuilding ordering and scheduled deliveries cont.. Newbuilding ordering is quite low for Post Panamax vessels amid low earnings Post Panamax orderbook Panamax orderbook Handysize orderbook Handymax orderbook

9. Agenda

10. International dry bulk freight market Dry bulk freight market reached at historical low levels during 2012 Baltic Dry Index (BDI) • The dry bulk fleet grew around15% during 2011and more than 12% during 2012, which increased the supply-demand gap and rates declined significantly • Although rates have improved in 2014, the International freight market is still under pressure of over supplied dry bulk vessels Time charter rate(1year) Baltic Index: All segments Source: Drewry Maritime Advisors

11. International dry bulk freight market cont.. Capesize trip rates went below the operating cost in 2012 for vessels trading in Singapore- Japan /Australia round voyage Capesize Trip rates Panamax Trip rates Supramax Trip rates Handysize Trip rates Source: Drewry Maritime Advisors

12. Agenda

13. Coal in energy mix : India Coal meets more than 50% Indian energy requirement Global: Share of coal in total energy mix 2013 • Coal, oil and natural gas are the prime energy sources across the globe and in India • Share of coal in energy mix of India is 55%, which is higher than the global share • Major industries for coal consumption are thermal power production, steel manufacturing and cement production • Indian thermal power plants consume more than 70% of the total Indian coal consumption. Electricity Generation ( Terawatt- hours) India :Share of coal in total energy mix 2013 www.drewry.co.uk Source: Drewry Maritime Advisors, BP Statistics

14. Coal consumption and production: India vs. top consumers Indian coal consumption has surged in recent years, but its production has stagnated Growth in coal consumption: India vs. top consumers Growth in coal production: India vs. top consumers Source: Drewry Maritime Advisors, BP Statistics

15. Coal demand: India Indonesia and Australia are the major suppliers of thermal and coking coal to India Sector wise coal demand: India • Thermal coal demand by power producing units are increasing significantly because of an increase in power production capacity and a lack of domestic production to meet the requirement • Construction of power projects in coastal areas has made importing coal more economical Steam Coal imports by source: India Coking Coal imports by source: India Source: Drewry Maritime Advisors, Ministry of Coal: India

16. Coal imports projections and major demand drivers for coal: India Coal production and consumption gap has nearly doubled in last ten years Steel Production: India Thermal power production capacity: India Coal imports: India Coal production/consumption gap: India Source: Drewry Maritime Advisors

17. Freight rate for importing coal to India Panamax vessels for coal imports in India are more in demand and getting better rates Voyage rates for coal imports to India: Panamax Voyage rates for coal imports to India: Capesize Source: Drewry Maritime Advisors

18. Indian port infrastructure and vessels at anchorage Dhamra and Gangavaram have the infrastructure to handle vessels with more than 150,000 dwt Largest dry bulk vessels handled at Indian ports Vessels waiting at anchorage at Indian ports Source: Drewry Maritime Advisors, Global ports

19. Agenda

20. Conclusion