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October 2009

Another Blue Ocean? The Development of the Capesize Dry Bulk Market David Beard - SSY.

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October 2009

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  1. Another Blue Ocean?The Development of the Capesize Dry Bulk MarketDavid Beard - SSY Whilst care and attention has been taken to ensure that the information contained is accurate, it is supplied without guarantee. SSY Consultancy & Research can accept no responsibility for any errors or omissions or consequences arising therefrom. Please note that in the current uncertain economic situation, all forecasts are subject to revision. October 2009

  2. Another Blue Ocean? Part 1: Ten Years of Developments in the Capesize Market October 2009

  3. 1999 - demand 1999 Seaborne iron ore and coal trade 890 Mt Iron ore and coal trade volumes same as the previous year Japan world’s biggest iron ore importer at 120 Mt Coal trade dominated by imports into Europe (161.8 Mt) and Japan (135.4 Mt) October 2009

  4. seaborne iron ore and coal trade October 2009

  5. 1999 - capesize fleet 1999 Existing Capesize fleet 76.5 Mdwt, 478 vessels Average Capesize vessel capacity 160,000 dwt Capesize newbuilding orderbook 8.8 Mdwt Capesize newbuilding orderbook represents 12% of existing fleet October 2009

  6. average capesize time charter earnings 1999 = $10,300/day 2009 = $38,400/day October 2009

  7. 1999 vs 2009 - demand upheaval 1999 Seaborne iron ore and coal trade 890 Mt Iron ore and coal trade volumes same as the previous year Japan world’s biggest iron ore importer at 120 Mt Coal trade dominated by imports into Europe (161.8 Mt) and Japan (135.4 Mt) 2009 • Seaborne iron ore and coal trade 1,704 Mt • Iron ore and coal trade volumes estimated up 40 Mt over the previous year • China world’s biggest iron ore importer at 600+ Mt • Coal trade dominated by imports into Asia (est. 386 Mt, excluding Japan) October 2009

  8. seaborne iron ore and coal trade October 2009

  9. 1999 vs 2009 - fleet upheaval 1999 Existing Capesize fleet 76.5 Mdwt, 478 vessels Average Capesize vessel capacity 160,000 dwt Capesize newbuilding orderbook 8.8 Mdwt Capesize newbuilding orderbook represents 12% of existing fleet 2009 • Existing Capesize fleet 163.7 Mdwt, 924 vessels • Average Capesize vessel capacity 177,000 dwt • Capesize newbuilding orderbook 137.7 Mdwt • Capesize newbuilding orderbook represents 84% of existing fleet October 2009

  10. Another Blue Ocean? Part 2: China, Shifting Trade Patterns & Fleet Inefficiencies October 2009

  11. why have freight rates been so high and volatile in a severe recession? CHINA... Cargoes PRC dry bulk imports jumped by over 90% between 4q08 & 3q09, led by record-breaking iron ore & coal volumes Tonne-miles/ballasting increased Chinese reliance on long haul imports reduction in short haul coal exports Congestion PRC iron ore discharge queues peak at 85/90 ships and Chinese coal demand also contributes to congestion in East Australia October 2009

  12. Chinese iron ore imports October 2009

  13. widening trade imbalances October 2009

  14. capesize fronthaul & backhaul rates October 2009

  15. major capesize iron ore trades

  16. major capesize steam coal trades

  17. major capesize coking coal trades

  18. Chinese net coal trade October 2009

  19. Australian coal exports to China October 2009

  20. SSY Australian coal port congestion index October 2009

  21. capesize vessels waiting to berth 49 capes “released” from queues yet again 75 capes added to queues once more 73 capes added to queues 34 capes “released” from queues 75 capes “released” from queues October 2009

  22. Another Blue Ocean? Part 3: Changes in Fleet Supply and Vessel Design Innovations October 2009

  23. quarterly changes in the dry bulk fleet October 2009

  24. net fleet change (2009 ytd) 17.0 Mdwt 5.7 Mdwt -1.7 Mdwt 2.6 Mdwt October 2009

  25. capesize fleet by year of build October 2009

  26. 2009 dry bulk carrier delivery position 49% 38% 49% 32% October 2009

  27. ultra-large capesize fleet by year of build October 2009

  28. SS Great Eastern October 2009

  29. MV Swiftwings October 2009

  30. HMS Victory October 2009

  31. Grebe Arrow October 2009

  32. Hull Concept October 2009

  33. Hull Concept October 2009

  34. SS Fin October 2009

  35. NYK Concept October 2009

  36. Another Blue Ocean? The Capesize markethas seen dramatic changes in cargo demand patterns in the past ten years Vessel supply has had to respond to these changes, although inefficiencies remain With continued economic development, further dramatic changes can be expected in the future In order to cope with these changes while seeking to protect the environment, continued innovation to improve ship design and reduce inefficiencies will be crucial October 2009

  37. SSY LONDON TEL: +44 207 977 7404 SINGAPORE TEL: +65 6854 7122 email: research@ssy.co.uk web: ssyonline.com October 2009

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