Peter Sand - BIMCO Bulletin

Economy

Use tabs to navigate to pages Macroeconomics Tanker Container Dry bulk Macroeconomics Despite diverging pandemic paths in the world, global growth pandemic Peter Sand, Chief Shipping Analyst at BIMCO Even in countries that seem to have the worst of the pandemic behind them, growth this year is expected to vary. China and the top two global economies, whereas the EU, Japan and the UK are lagging behind and need at least another year to return to prepandemic levels. Emily Stausbll, Shipping Analyst at BIMCO being announced worldwide. Asia 12% 20 21 ret gro ur wt India nt h o p ne re- ede pa d f nd or em ic lev el 11% 10% 9% China S. Africa Brazil Japan 6% Global Advanced economies Eurozone 7% Developing economies United States United Kingdom 8% 5% Australia Russia 4% 2021 GDP growth more pressure now than at any other point in this pandemic, as securing the needed inputs has become an increasing challenge in 2020 and 2021 GDP growth compared to necessary growth for return to pre-pandemic level 3% 2% 1% -10% -8% -6% -4% -2% 2020 GDP growth 0% 0% 4% 2% Source: BIMCO, IMF Notes: Indian 2021 growth is adjusted IMF forecast following latest COVID surge. growth in 2020, consumer spending on retail goods, which fell in demand, and thereby demand Just over half of the growth in South Korean exports came from those to China and the US, which shipping, will remain far from record levels happen. a leading indicator of US container imports also jumped, with 30% 500 20% 400 10% 300 0% 200 -10% 100 -20% 0 -30% March which was the highest monthly level since September 2006. Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021 Mar 2021 Apr 2021 Billion USD record set in December 2020. In April retail they fell slightly from 600 Retail sales Food services and drinking places Growth rate US Acc. y-o-y retail sales growth rate (RH-axis) Acc. y-o-y food services sales growth rate (RH-axis) Source: BIMCO, US Census pandemic months of January and February last year. Europe Supply chain issues are holding up the recovery for some of the major industries in Europe, which have seen a shortage of certain Thousand passenger cars this will be split over the next decade, with less of a focus on 600 30% 525 20% 450 10% 375 0% 300 -10% 225 -20% 150 -30% 75 -40% 0 -50% Jan Feb Mar Apr May 2019 2020 2021 Jun Jul Aug Sep Oct Nov Dec Growth rate 2019-2021 Acc. y-o-y growth from 2019 (RH-axis) Acc. y-o-y growth 2020 (RH-axis) Acc. y-o-y growth 2021 (RH-axis) Source: BIMCO, VDA Motor vehicle manufacturing now easing as vaccines become more widely available, the IMF Outlook cases and deaths rising, and a geographically very uneven vaccine they avoid new surges will boost their economies. problems for many months to come, as manufacturers scramble to piece together the components Tanker: 25 May 2021 (change since 1 January 2021) Crude: Product: Rate indices (change since 19 February 2021) BDTI: BCTI: Quick Facts Tanker shipping Demand drivers and freight rates go on its recovery journey. LR2 earnings rose to USD 26,823 dollars per day on 26 March as the Suez Canal blockage sparked fears of reduced available tanker shipping capacity in the key export region in the Arabian Gulf. They have since fallen to USD 12,925 per day on 21 May. The smaller oil-product tankers saw an even smaller to USD 12,432, and Handysizes reaching USD 17,417. Even with these recent peaks, average earnings for all product tankers so far this year have been between USD 9,168 and USD 10,334 per day far from break-even levels and between 2 and 4 Even the modest spike in oil product tanker earnings looked good compared with earnings for Very Large Crude Carriers (VLCCs)s. The benchmark 270,000-tonne ship going from the Persian Gulf to China had been earning less than USD 3,000 per day between midJanuary and mid-May, though on 26 May daily earnings had risen to Supressed demand and plenty of risks threatening the recovery means tanker shipping companies are in for another tough year Peter Sand, Chief Shipping Analyst at BIMCO day between the start of April and mid-May. This was only slightly higher than average earnings for both Suezmax and Aframax ships; Emily Stausbll, Shipping Analyst at BIMCO Oil product tanker earnings 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 LR2 LR1 0 May 2021 Mar 2021 Feb 2021 Jan 2021 Dec 2020 Oct 2020 Sep 2020 Jun 2020 Jul 2020 0 Apr 2021 25,000 Nov 2020 30,000 Aug 2020 USD per day (source: Tradeviews). 30,000 USD per day 2020-2021 MR Source: BIMCO, Clarksons 2020 to fall to 14.8m tonnes, down from 20.7m in April 2019. The throughput had recovered to 21m tonnes in March 2021 but fell back to 19.9m tonnes in April. Crude oil tanker earnings Indian crude oil imports tonnes of petroleum products. This processing gain is achieved because the products are less dense than the crude oil used and therefore more voluminous. 2019-2020 Kazakhstan Mexico Venezuela In the 12 months from April 2020 to March 2021, a total of 221.8m Kuwait USA Nigeria crude oil, this amounted to 30.5m tonnes between April 2020 and United Arab Emirates Saudi Arabia Iraq 0 5 10 15 20 25 30 35 40 45 50 Million tonnes Not only is India highly dependent on crude oil imports, but it has become dependent on a few key sources, with the top three Iraq, 2019 2020 Source: BIMCO, Ministry of Petroleum and Natural Gas India of its total imports in 2020. However, in response to the OPEC+ biggest boost so far this year caused by the fall in Indian imports from OPEC+. US exports to India grew With money in the bank from last years boom, crude oil tankers have proven popular at the shipyards In 2020, only two of the top 10 biggest sources of crude oil were non-OPEC+: USA and Mexico, both of which are considerably further away from India than the majority of OPEC+ countries. This comes even as the OPEC+ alliance agreed to ease its supply cuts, albeit gradually. Crude oil Saudi Arabia as it winds down its voluntary cut of 1m bpd. The gradual rollback shows the alliances US. The former has had an average throughput of 14.17m bpd compared with the 14.08m bpd in the of 16.3m bpd compared with Chinas 12.7m. In April, the vaccine spot when it processed 14.97m bpd its highest level since March 2020. Despite this return to the status quo, the gap between the avoid COVID-19 cases spreading over the holiday. Despite the fall in 18 17 17 16 16 15 15 14 14 13 13 12 12 11 11 10 10 Million barrels per day 18 Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021 Feb 2021 Mar 2021 Apr 2021 Million barrels per day pandemic size. 2019-2021 US China Source: BIMCO, EIA, NBS 179.6 million tonnes. Supply last years boom, crude oil tankers have proven popular at the shipyards. In total, 44 new crude oil tankers have been ordered year to date. More than half (27) are VLCCs, with an average capacity of 303,000 Dead Weight Tonnes (DWT). They are slated to be Product tankers have also declined in popularity, with 32 (1.5m DWT) of them having been demolished, compared with only 24 35 7% 30 6% 25 5% 20 4% 15 3% 10 2% 5 1% 0 0% -5 -1% -10 -2% -15 -3% -20 -4% 2017A 2018A 2019A 2020A Delivered 2021F 2022E To be delivered p.a. 2023E Growth rate p.a. Million DWT Oil product tankers have proven less popular: some 36 have been ordered in the period, 28 of which are MR tankers. 2017A-2023E Growth rate (RH-axis) Source: BIMCO, Clarksons Over the full year, BIMCO expects 2.5m DWT of oil product tankers and 7m DWT of crude oil tankers to be demolished. Oil product With deliveries of 16.3m DWT of crude oil tankers and 6.1m DWT growth Outlook and leisure travel is opening up. 2019-2021F It seems an established fact that peak oil demand in North America is now behind us at 25.3m bpd in 2019. European oil demand peaked in 2017 at 14.4m bpd. 46.5% 46.6% 50% 45.3% 9 45% 8 40% 7 35% 6 30% 5 25% 19.1% 4 19.9% 20.2% 20% 15% 3 8.8% 2 7.5% 5.1% 5% 1 0 2019 2020 2021F Motor gasoline 2019 2020 2021F 2019 2020 2021F Source: BIMCO, EIA oil demand in 2021 will reach 96.4m bpd, 3.3mbpd below 2019 levels, but up 5.4m on 2020, though with plenty of downside risks Note: June - August covers the US driving season when oil demand seasonally peaks in the US. As has been the case in recent years, the largest growth will come from the non-OECD Asia, which the IEA expects will see a 2.2m bpd increase in its demand compared with 2020, becoming the only region to exceed its 2019 oil demand this year. though with 2022 demand expected to come in at just 0.3m bpd lower than 2019 levels, not much would be needed to push it back above the 99.7m bpd of 2019. Supressed demand and plenty of risks threatening the recovery means tanker shipping companies this one. The war chests that have been built up will also limit the number of ships being sent for Photo (top): Crude Oil Tankers DWT Product Tankers DWT Aframax Suezmax VLCC 80,000-119,999 120,000-199,999 200,000+ Product 10,000-29,999 30,000-59,999 60,000-79,999 80,000-120,000 LR1 LR2 Connect with BIMCO Facebook 10% Linkedin 0% Share of total US oil demand fuel are forecast to average 14.5m bpd in the summer months, up from the 12.9m in 2020, but not yet back at the 15.5m bpd of the summer of 2019. Million b/d 10 Container: Rate indices CCFI: SCFI: Quick Facts Container shipping Records keep falling as industry enjoys best markets ever Demand drivers and freight rates Peter Sand, Chief Shipping Analyst at BIMCO new ships Emily Stausbll, Shipping Analyst at BIMCO Global container shipping demand 16 15% 14 12% 12 9% 10 6% 8 3% 6 0% 4 -3% 2 -6% 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Growth rate Million TEU 2019-2021 -9% Dec Acc. y-o-y growth from 2019 (RH-axis) Acc. y-o-y growth 2020 (RH-axis) Acc. y-o-y growth 2021 (RH-axis) 2019 2020 2021 Source: BIMCO, CTS Container ship charter rates 6 - 12 months 70,000 70,000 60,000 60,000 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May 2019 2019 2019 2019 2019 2019 2020 2020 2020 2020 2020 2020 2021 2021 2021 TEU 700 TEU 2,500 TEU 4,250 TEU 6,500 USD per day USD per day 2019-2021 0 TEU 8,500 Source: BIMCO, Harper Petersen & Co Container shipping freight rates from Far East 2020-2021 9,000 9,000 8,000 8,000 7,000 7,000 6,000 6,000 5,000 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 USD per FEU 10,000 USD per FEU 10,000 0 USWC spot USWC contract USEC spot USEC contract May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021 Dec 2020 Nov 2020 Oct 2020 Sep 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020 0 North Europe spot North Europe contract Source: BIMCO, Xeneta Supply 2017A-2023E 6 1, 00 4 7 0 3 00 2 0 1 2 0 0 -2 0 -1 - 00 -2 Thousand TEU 1,000 2017A 2018A 2019A Delivered 2020A 2021F To be delivered p.a. 2022E 2023E Growth rate (RH-axis) Source: BIMCO, Clarksons If the high Outlook Container TEU Connect with BIMCO Facebook Linkedin YouTube Growth rate p.a. 1,2 0 Dry Bulk: Rate indices BDI: BCI: BPI: BSI: BHSI: Quick Facts Dry bulk shipping Record-breaking start to year drives earnings to decade highs Demand drivers and freight rates Peter Sand, Chief Shipping Analyst at BIMCO Emily Stausbll, Shipping Analyst at BIMCO Dry bulk earnings 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 Capesize (180k) Panamax (82k) Jan 2021 Jul 2020 Mar 2020 Jan 2020 Sep 2019 0 Supramax (58k) USD per day 30,000 May 2021 30,000 Mar 2021 35,000 Nov 2020 35,000 Sep 2020 40,000 May 2020 40,000 Nov 2019 45,000 Jul 2019 45,000 May 2019 50,000 Mar 2019 50,000 Jan 2019 USD per day 2019-2021 0 Handysize (38k) Source: BIMCO, Clarksons Global dry bulk demand 500 15% 450 12% 400 9% 350 6% 300 3% 250 0% 200 -3% 150 -6% 100 -9% 50 -12% 0 -15% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021 2021 Capesize Supramax Acc. y-o-y growth Capesize (RH-axis) Acc. y-o-y growth Supramax (RH-axis) Growth rate Million tonnes 2020-2021 Panamax Handysize Acc. y-o-y growth Panamax (RH-axis) Acc. y-o-y growth Handysize (RH-axis) Source: BIMCO, Oceanbolt Brazilian seaborne iron ore exports 45 20% 40 15% 35 10% 30 5% 25 0% 20 -5% 15 -10% 10 -15% 5 -20% 0 -25% Jan Feb Mar Apr May 2019 2020 2021 Jun Jul Aug Sep Oct Nov Dec Growth rate Million tonnes 2019-2021 Acc. y-o-y growth from 2019 (RH-axis) Acc. y-o-y growth 2020 (RH-axis) Acc. y-o-y growth 2021 (RH-axis) Source: BIMCO, ComexStat Supply 6% 50 5% 40 4% 30 3% 20 2% 10 1% 0 0% -10 -1% -20 -2% Million DWT 60 2017A 2018A Delivered 2019A 2020A 2021F To be delivered p.a. 2022E 2023E Growth rate (RH-axis) Source: BIMCO, Clarksons Outlook Photo (top): shaunl / iStock Dry Bulk Connect with BIMCO DWT Growth rate p.a. 2017A-2023E