This document discusses seaborne trade cargo volumes and freight rates in the Black Sea region. It notes that over 470 million tons of cargo were handled in 2013 across 32 ports in the region. Ukrainian and Russian ports handle over 70% of total cargoes. Cargo flows have increased 3-9% annually over the last decade. The key drivers of supply and demand that impact freight rates are discussed, including political decisions, the global economy, regulations, and unexpected crises on the demand side, and scrapping, lay-ups, new deliveries, and financing on the supply side. The market is expected to remain volatile in the coming years due to fluctuations in oil prices, declining global steel demand, and China's economic growth
3. Black Sea PortsBlack Sea Ports
32 main ports on the Black and Azov Sea coasts, covering Ukrainian,
Russian, Bulgarian, Romanian, Turkish and Georgian coastline.
In 2013 total cargo turnover of the 25 largest ports and terminals of the
Black Sea exceeded 470 million tons.
It is estimated that the majority of these - over 70% of the total cargoes
are handled in Ukrainian and Russian ports
Cargo flows have been on a steady rise over the last decade, on an
annual scale ranging from 3 to 9%.
Key destinations – the Mediterranean and beyond…
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5. Changes in DemandChanges in Demand
Political Decisions – Bans, Boycotts, War, Trade
Agreements
Global Economy
Environmental Regulations
Natural Phenomena
Unexpected Crises
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NO one can control demand
6. Changes in SupplyChanges in Supply
Scrapping
Lay-Up
Slow Steaming
New Deliveries (Ordering)
Future Prospects
New-building Prices
Access to Finance
Interest Rates
Technological Improvements of New Designs
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Owners CAN control supply
7. History of Drybulk Shipping – CyclicalityHistory of Drybulk Shipping – Cyclicality
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Source: Clarkson’s Research
10. Where are we in the Cycle?Where are we in the Cycle?
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11. Demand Fundamentals – Seaborne TradeDemand Fundamentals – Seaborne Trade
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• Seaborne demand remains robust
• Market growing by more than 4.5% CAGR in volumes through
2016
Source: Clarkson’s Research
12. DryBulk Fleet DevelopmentDryBulk Fleet Development
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• Current orderbook stands at about 23% of existing fleet
Projected Net Fleet GrowthProjected Net Fleet Growth
Source: Clarkson’s Research
13. Scrapping ActivityScrapping Activity
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• If fleet was expanding proportionally, scrapping would equal 4% p.a. (ie 1/25)
• Current fleet about 4 times bigger than fleet 25 years ago
• Existing fleet: 9% and 19% older than 20 years and 15 years, respectively
Source: Clarkson’s Research
Drybulk Scrapping as a % of FleetDrybulk Scrapping as a % of Fleet Drybulk Fleet – Age Profile (Basis Dwt)Drybulk Fleet – Age Profile (Basis Dwt)
14. Market Expectations - 2015 to 2018Market Expectations - 2015 to 2018
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Source: Clarkson’s Research
15. Oil business almost …booming!Oil business almost …booming!
Since early 2015 we have seen a steady freight rate rise in the oil tanker sector.
Last few weeks the freights are trending has been sharply upwards.
Freight rise is also being fueled by lot of (larger) tankers demand being used for
storage. One out of three VLCCS are hired for storage!
Black Sea tanker rates are not as high as as in other regions but closely follow
the trend.
Sharp fluctuations on oil prices will maintain high volatility in the shipping
industry.
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16. Global steel demand under pressureGlobal steel demand under pressure
Steel and raw material commodities remain under price pressure. The lower raw
material prices make the Russian and Ukrainian steel mills less competitive and
cannot predict any stunning freight boom in the Black Sea region other than the
‘peaks’ mostly associated to seasonal grain trade.
The Chinese factor of slowing economic growth and reduced steel production
will have a great impact on world steel transportation, increasing freight volatility.
China still accounts for almost 45% of goods carried by sea.
India surpassed US steel production in 2015 and this signals a new era in steel
market trade. Shipping to / from India not greatlfy affected due to local demand.
No major changes expected in the short term ahead.
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17. ConclusionConclusion
We can only expect another volatile year with unstable freight rates. There is
steady cargo volumes increase despite the financial crisis however
Supply / demand seasonal factors to bring great fluctuations in the Black Sea
freight market.
Young age Coasters to remain healthy in the long run as majority of fleet is over-
age and there are no large replacement orders.
Be prepared for the unexpected!
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