> Giuseppe Bottiglieri Rome, 8 th May 2013 All rights reserved, 2013 Giuseppe Bottiglieri - 8th May...

<<Italy and the World – QUO VADIS?>>

Giuseppe Bottiglieri

Rome, 8th May 2013

All rights reserved, 2013

GIUSEPPE BOTTIGLIERI SHIPPING COMPANY SPASHIPOWNERS SINCE 1850

- ITALY -

Giuseppe Bottiglieri - 8th May 2013


QUO VADIS?

Giuseppe Bottiglieri Shipping Company spa

The Shipping Industry DRY CARGO VESSELS

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What are our perceptions and expectations of the freight market?

The view from the bridge



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Outlook of the shipping market


03/05/2013


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03/05/2013


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WORLD FREIGHT MARKET

Iron Ore Coal

DEMANDSUPPLY


IDEAL BALANCE : SUPPLY=DEMAND



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Analysis of the DEMAND

DEMAND IS DRIVEN BY WORLD GDP GROWTH



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Source: World Economic Outlook FMI – April 2013

World GDP Growth

Average3,25% in 2013 and 4% in 2014



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Real GDP Growth




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• In Japan, growth is projected to be 0,5% in 2013, moderately higher than in October 2012 WEO. A sizable stimulus – about 1,5% of GDP over two years – will boost growth by some 0,6% point in 2013

• Growth will rise in India to 5,75% in 2013 as a result of the improved external demand and recently implemented pro-growth measures.

• China’s growth is set to accelerate slightly to about 8% in 2013, reflecting continued robust domestic demand in both consumption and investment and renewed external demand. Inflation will pick up only modestly to an average of 3% in 2013,

• In Korea, improved exports should help spur private investment and help growth rebound to 2,75%.

• Growth in the ASEAN-5 economies will remain strong at 6% in 2013, reflecting resilient domestic demand.

World GDP Growth



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World output growth is forecast to reach 3,25% in

2013 and 4% in 2014



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Analysis of SUPPLY

SUPPLY IS DRIVEN BY SEABORN TRADE GROWTH



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TOTAL1,414



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Demolition news:Many Chinese shipyards partially converted

their premises into 1/3 shipbuilders, 1/3 repairs and 1/3 demolition.

The demolition price is still remaining at high level: about USD 400 pmt lightweight.

The number of vessels scrapped during 2012 hit the highest record of 1414 units.

During 1st quarter 2013 the number of ships scrapped are less but remain sensitive.


Giuseppe Bottiglieri - 8th May 2013 32



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• Outlook for product tankers is increasingly bright

• Crude tankers will also see a healthier market in 2014-2015, but the outlook is not so optimistic. Volumes are projected to increasingly head to Asia to meet Chinese demand, but Chinese oil consumption has dipped recently due to lower growth figures.

Can we see the light at the end of the tunnel?

Source: Lloyd’s List Intelligence

YES



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• The product tanker market will be boosted by 1.7m barrels per day of global refinery capacity to be added over the next four years.

• Fleet growth of 2% compared with higher trade growth of around 4% will push the product tanker market towards a long-awaited recovery next year.

• Refinery closures in the Atlantic Basin mean the western hemisphere will be forced to source cargoes long haul from new Asian and Middle Eastern refineries.

• India stands out as a major new exporter of refined oil products, led by its 1m bpd Jamnagar refinery, the largest refinery in the world. The country is focused on exports, rather than on supplying the domestic market.The Middle East is also investing in exporting more products from new refineries, and the US Gulf is boosting its exports to South America.




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• On the import side, Europe is set to play a key role for product tankers. Environmental regulations stipulate that fuel with a sulphur content of 0.1% has to be used by shipping in the North and Baltic seas by 2015. Gasoil, rather than fuel oil, would meet those green requirements, and Europe needs to import that gasoil.

• Trafigura was recently said to have secured eight medium range product tankers on three-year time charters at $15,500 per day each.




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• Values of secondhand medium range product tankers show a clear rising trend over the last six months amid an increasingly bright outlook for this market.

The Baltic Exchange quotes five-year-old MR product tankers as costing $22.39m. This is up from $21.39m at the end of January and higher than $20.76m at the start of December last year.



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• The positive forecast for product tankers, however, depends on owners not placing too many vessel orders. The last time this happened, the product tanker fleet swelled 10% in 2009.

• “We believe the improving demand and supply balance of the product tanker market should continue to positively affect spot and period charter rates going forward”.


Mare Forum 2013 - 391+802 = 1,193 ships = 14% > 20 YRS

Mare Forum 2012 - 426+1117 = 1,543 ships = 19% > 20YRS

Mare Forum 2011 – 540+1415 = 1,955 ships = 26% > 20YRS

DRY BULK FLEET BREAKDOWN


DRY BULK FLEET ORDERBOOK


Pendig deliveries: 1,424 Ships

World fleet = 8,808 shipsLess:Ships > 20yrs = 1,193 ships

ORDER BOOK 1,424 SHIPS _________

Total = 9,039


WORLD FLEET/ORDER BOOKDRY CARGO VESSELS IN MAY 2013

=

7,615


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World fleet = 8,808 ships 8,808Less:Ships > 20yrs = 1,193ships

ORDER BOOK (2011/2012) 1,424 _________

Total = 9,039 9,039


=

7,615

WORLD FLEET/ORDER BOOKDRY CARGO VESSELS IN MAY 2013

Source: BRS 22/04/2013


SURPLUS world fleet (2,5%) = 231 SHIPS

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World Growth 3,25% in 2013


CYCLICAL MOMENT


2012

Freight Market

Evolution

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ACTUAL POSITION

2013


CYCLICAL MOMENT


REBOUND TIME2014

Freight Market

Evolution

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ACTUAL POSITION

2013

When will crisis be over in the shipping industry?

MOST PROBABLY IN ONE or max TWO YEARS’ TIME

For which reason?WORLD GROWTH 3,25% IN 2013

AND 4% IN 2014

SURPLUS OF WORLD FLEET IS ONLY 2,5%




TO REBALANCE SUPPLY/DEMAND


1)Newbuilding orders have been discouraged;

2)Shipbuilder’s industry reduced capacity and converting into ship repairs and scrapping yards;

3)Financial institutions heavily reduced financing of new shipping investments;

4)BRICS countries are still maintaining their support for trading of commodities.

5)World growth is even better than expected

We are on the right way towards a quick rebound of the market

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CONCLUSIONS:1. The cycle momentum has already passed its

lowest level and the shipping industry has learnt the lesson !

2. The entire industry is readjusting by herself, the over supply of new tonnage is sensibly decreasing and the old tonnage is going to be scrapped.

3. The absolute total volume of commodities carried is maintaining the same volume as the previous years.

4. The World Growth is estimated at 3,25% - 4% for next 2 years and this is enough to think positive in the nearest future provided Shipowners DO NOT ORDER in the future more than 2% of NEWBUILDINGS.



LLOYDS LIST03 05 2013


LLOYDS LIST29.04.2013

Thank You

Giuseppe Bottiglieri


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