shipping and law conference shipbuilding

Copyright©2010 Bureau Veritas - All rights reserved.

Naples, October 2011

Shipping and Law ConferenceShipbuilding

Didier CHALEAT, SVP Bureau Veritas


Market issues

Didier CHALEAT, SVP Bureau Veritas , Managing Director Marine West Zone

3Shipping and the law October, 2011Copyright©2010 Bureau Veritas - All rights reserved.

After an unprecedented “wave” of new orders an unprecedented shipbuilding crisis?

► Charter rates increases from 2006 to 2008, fueled by Western and Far East development have brought unprecedented high revenues to shipping. And “vicious” circle started :

Huge number of new orders placed mainly in Far East yards, often too quickly and at “sellers” conditions, at too high prices in first years;

Outstanding investments for increase of shipbuilding capacities including new yards, subcontracting, hiring, training of large number of new employees too rapidly with delays and quality issues.

► 2008, recession started in western, with restriction in finance of new building programs,

► 2009, low level of new orders,

► 2010, much higher level of new orders but with no direct relation with demand- ignited to compensate delays in deliveries of container vessels (to help postpone the container oversupply crisis)



► 2011, unexpected high level of orders for container vessels and lng carriers without short term demand increase:

► Tankers: (tdw) fleet growth from beginning 2008: +25%

orderbook sep 2011/existing fleet: +20%

► Bulk carriers: (tdw) fleet growth from beginning 2008: +50%


► LNG Carriers: (m3) fleet growth from beginning 2008: +65%


► Container vessels: (teu) fleet growth from beginning 2010: +40%




► Despite BRICS growth perspective charter rates started to deeply drop with oversupply fueled by too many new deliveries versus demand, in many sectors of shipping. And finance access seem more and more restricted.

► So what next if no market need orders to be placed by shipyards in due proportion of their massively increased capacity, especially in China ?

Deliveries world wide 2004: 30 m GT; China 12%

Deliveries world wide 2010: 65 m GT; China 40%

Sept 2011 orderbook : 257 mGT !!!

► Shipbuilding market becoming again buyer’s market?

► But higher risk of insolvencies and

► Competition with new potential subsidies policies to keep employment in shipyards fueling even more speculative orders with their consequences to lengthen the crisis….!!!


Market information BRSBarry Rogliano Salles


Oil driven growth

Bulk & Container driven growth

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

1970

1971

1972

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1980

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2004

2005

2006

2007

2008

2009

2010

2011

World Seaborne Trade Evolution since 1970

Containers Other Dry Cargo Grain Coal

Iron ore LNG Oil Products Crude

(million tons)

+4,7%

+0,5%

+3,4%

+4,3%

+2,3%

TRANSPORT VOLUMES STILL INCREASING

(Source BRS)


BUT FLEET GROWTH IS STRONG TOO

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

1990 1995 2000 2005 2010 2011

Others

Bulker

Tanker

Million Deadweight

(21,400 ships)(23,200 ships)

(25,000 ships)

(27,500 ships)

(34,200 ships)

(37,000 ships)

2% CAGR

9% CAGR

(Source BRS)


OIL PRODUCT DEMAND GROWTH LOWER IN 2011OIL PRODUCT DEMAND GROWTH LOWER IN 2011


OIL DEMAND RELATIVELY STRONG BUT FLEET OVERCAPACITYOIL DEMAND RELATIVELY STRONG BUT FLEET OVERCAPACITY

80

82

84

86

88

90

92

-10000

0

10000

20000

30000

40000

50000

1Q 2009

2Q 3Q 4Q 1Q 2010

2Q 3Q 4Q 1Q 2011

2Q* 3Q* 4Q*

Global Oil Demand vs Tanker Rates2009 - 2011

Global Oil Demand

Average VLCC rates

Average SUEZMAX rates

Average AFRAMAX rates

$/day m bbl/day

* IEA estimates


FLEET: VLCCFLEET: VLCC


FLEET: SUEZMAXFLEET: SUEZMAX


MAJOR DRY BULK DEMANDMAJOR DRY BULK DEMAND

-

500

1 000

1 500

2 000

2 500

DRY BULK SEABORNE TRADE - Major commodities

Grain (excl Soyabeans)

Thermal Coal

Coking Coal

Iron Ore

(Mt)

(* - Forecast)

(Average growth 1990-1997: 2.8%)

(Average growth 1998-2002: 3.1%)

(Average growth 2003-2008 5.8%)

(Average growth 2009-2012 <5% ?)


DRY BULK FREIGHT RATESDRY BULK FREIGHT RATES

-

50 000

100 000

150 000

200 000

250 000

US$/dayDRY BULK CARRIERS - SHORT T/C AVERAGE

Capesize T/C Average

Panamax T/C Average

Supramax T/C Average

Handymax T/C Average

Handysize T/C Average

(Average Baltic Exchange T/C routes)


DRY BULK FLEET – AGE BREAKDOWNDRY BULK FLEET – AGE BREAKDOWN

< 5 yrs 5-9 yrs 10-14 yrs15-19 yrs20-24 yrs > 25 yrs Total On order (% of fleet)

VLOC 56 4 4 47 23 1 135 69%

Capesize 511 181 140 150 88 38 1108 30%

Small Cape 233 37 22 21 23 11 347 63%

Panamax 453 325 354 198 129 229 1688 44%

Supramax 961 426 321 233 134 272 2347 31%

Handysize 666 217 238 134 113 753 2121 27%

Total 2880 1190 1079 783 510 1304 7746 35%

(source BRS)Dry Bulk Fleet Breakdown 06-09-2011 number of ships


LNG DEMANDLNG DEMAND


0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

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90 000

LNG FREIGHT SPOT RATE (basis 150,000 cbm vessel)

US $

Earthquake in Japan•Source BRS

LNG MARKET: SPOT RATE VARIATION

•?


FLEET: LNGFLEET: LNG


Bureau Veritas Information


BV Marine key figures

► Class fleet : 9,493 ships, 76.46 m gt

► Newbuilding orderbook : 28.82 m gt

► New orders : 9.53 m gt

► Marine turnover : € 313.5 m

The year 2010 26 October 2011

► Class fleet : 9,817 ships, 84.3 m gt

► Newbuilding orderbook : 2000 ships, 23.35 m gt

► New orders : 5.75 m gt


30

40

50

60

70

80

90

The BV Active Fleet evolution (grt)

BV fleet 26 10 20119,817 ships for 84.3 m gt


The BV fleet per ship type (grt)

Bulker 36,6 %

Tanker 19,6 %

Cargo 8,6 %

Passenger 4,9 %

Container 13,5 %

Gas 8,1 %

Other 8,6 %


Newbuilding Order Book Evolution (grt)

26 10 2011Total order book : 2,000 ships


Newbuilding order book by ship type (gt)

Bulker 52 %

Tanker 23,2 %

Cargo 5,5 %

Passenger 3,2 %Container 7 %Gas 2,7%

Other 4,6 %

The 20,000 dwt oil/chemical tanker Icdas-11 built by ICDAS CELIK ENERJI TERSANE ULASIM SAN for MARDENIZ SHIPPING MANAGEMENT


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