Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — DNB Shipping Conference March 2018
28 slides from Cmb.tech Nv's conference presentation, March 2018
Slide 1: Vessel Supply – Barriers to Entry and Obstacles to Exit
VESSEL SUPPLY – BARRIERS TO ENTRY AND OBSTACLES TO EXIT PADDY RODGERS CEO DNB SHIPPING CONFERENCE - MARCH 2018 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Forces Shaping Shipping
FORCES SHAPING SHIPPING “AN INDUSTRY MORE SINNED AGAINST THAN SINNING” HYPER- • Freight auction sold as a commodity COMPETITIVE CUSTOMERS • Stronger and fewer yet owners are many and weak SUPPLIERS • Bunkers/Shipyards/Bankers – Owners are small they are big 3
Slide 4: Forces Shaping Shipping
FORCES SHAPING SHIPPING “AN INDUSTRY MORE SINNED AGAINST THAN SINNING” HYPER- • Freight auction sold as a commodity COMPETITIVE CUSTOMERS • Stronger and fewer yet owners are many and weak SUPPLIERS • Bunkers/Shipyards/Bankers – Owners are small they are big BARRIERS TO ENTRY OBSTACLES TO EXIT 4
Slide 5: Tanker Bathtub – Still Unbalanced?
TANKER BATHTUB – STILL UNBALANCED? CONTRACTING REGULATION ORDER BOOK OPERATIONAL FLEET SCRAPPING/ OTHER USE 5
Slide 6: Yard Capacity Reducing but Remains Elevated
BARRIERS YARD CAPACITY REDUCING BUT TO ENTRY REMAINS ELEVATED 6 Source: Morgan Stanley
Slide 7: Contracting Continued Despite Challenging Freight Rates
BARRIERS CONTRACTING CONTINUED DESPITE TO ENTRY CHALLENGING FREIGHT RATES 7 Source: TI VLCC Database
Slide 8: Contracting Continued Despite Challenging Freight Rates
BARRIERS CONTRACTING CONTINUED DESPITE TO ENTRY CHALLENGING FREIGHT RATES 8 Source: TI VLCC Database
Slide 9: Contracting Continued Despite Challenging Freight Rates
BARRIERS CONTRACTING CONTINUED DESPITE TO ENTRY CHALLENGING FREIGHT RATES 9 Source: TI VLCC Database
Slide 10: Contracting - Low Prices Too Good Too Miss
BARRIERS CONTRACTING - LOW PRICES TOO TO ENTRY GOOD TOO MISS 34 59 10 Source: TI VLCC Database
Slide 11: Korean Shipyards Key in Driving Contracting
BARRIERS KOREAN SHIPYARDS KEY IN TO ENTRY DRIVING CONTRACTING VLCC Suezmax 45 40 35 No of Vessels ordered since August 2016 30 25 20 15 10 5 0 Korea China Japan Other 11 Source: Clarksons
Slide 12: Order Book Size Not the Issue
Orderbook as % of fleet 10 20 30 40 50 60 0 1996-Jan Source: Clarksons 1996-Aug 1997-Mar 1997-Oct BARRIERS TO ENTRY 1998-May 1998-Dec 1999-Jul 2000-Feb 2000-Sep 2001-Apr 2001-Nov 2002-Jun 2003-Jan 2003-Aug 2004-Mar 2004-Oct 2005-May VLCC Orderbook % Fleet 2005-Dec 2006-Jul 2007-Feb 2007-Sep 2008-Apr
Slide 13: Order Book Delivery Concentration the Key Issue
BARRIERS ORDER BOOK DELIVERY TO ENTRY CONCENTRATION THE KEY ISSUE 20 18 18 16 15 14 14 14 13 13 13 13 No of VLCC deliveries 12 12 12 12 12 11 11 11 11 10 10 10 9 8 8 8 8 7 7 6 6 6 5 4 4 4 4 3 2 2 0 13 Source: Clarksons
Slide 14: Average Age of Fleet Encouraging Rise
Average Age in Years Source: Clarksons 10.00 10.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 2003-Jan BARRIERS TO ENTRY 2003-Jul 2004-Jan 2004-Jul 2005-Jan 2005-Jul 2006-Jan 2006-Jul 2007-Jan 2007-Jul 2008-Jan 2008-Jul 2009-Jan 540738 VLCC Fleet - Average Age Years 2009-Jul 2010-Jan 2010-Jul 2011-Jan
Slide 15: Floating Storage – Small Supply Post Backwardation
No of VLCCs in floating storage 0 10 20 30 40 50 60 70 Jan-15 Feb-15 Mar-15 Source: Clarksons Apr-15 May-15 BARRIERS TO ENTRY Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 No VLCCs in Floating storage Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-1
Slide 16: Exit from Fleet – Utilisation Decreases with Age
OBSTACLES EXIT FROM FLEET – UTILISATION TO EXIT DECREASES WITH AGE 16 Source: Euronav
Slide 17: Exit from Fleet – Age Changes Choices
OBSTACLES EXIT FROM FLEET – AGE CHANGES TO EXIT CHOICES 17 Source: TI VLCC Database
Slide 18: Encouraging Pipeline of Assets > 17 Years of Age
OBSTACLES ENCOURAGING PIPELINE OF TO EXIT ASSETS > 17 YEARS OF AGE 18 Source: TI VLCC Database, Euronav Suezmax Database
Slide 19: Regulation – Accelerates Exit
OBSTACLES TO EXIT REGULATION – ACCELERATES EXIT Post Sept 2019 Until September 2019 MANDATORY installation of Ballast Water owners exempt from approved Ballast Water Treatment installing Ballast Water treatment system at next treatment systems Dry Dock Post January 1 2020 vessels will not be Sulphur
Slide 20: Sulphur Emissions 2020 – Ship Owner Options = Challenging
OBSTACLES SULPHUR EMISSIONS 2020 – SHIP TO EXIT OWNER OPTIONS = CHALLENGING Non Compliance Low sulphur fuel Scrubbers Slow Steaming LNG • Tempting for • Preferred • Limited • Operational • Not seen as few owners solution for capacity of solution but viable solution most available likely only given t
Slide 21: Regulation – Banks Remain Under Extreme Pressure
OBSTACLES REGULATION – BANKS REMAIN TO EXIT UNDER EXTREME PRESSURE Around USD 94bn withdrawn from shipping sector since 2010 Source Petrofin 21
Slide 22: Ship-Owners Dilemma
OBSTACLES TO EXIT SHIP-OWNERS DILEMMA Family history / Regulatory cycle sentiment costs Hope that cycle Pakistan scrap Low freight rate = turning point is soon capacity cashflow negative Monsoon season Invested capital – Scrapyard Attractive scrap price human and financial capital Additional regulat
Slide 23: 2010-14: Companies Defaulted and Exited Market – Not Ships!
OBSTACLES 2010-14: COMPANIES DEFAULTED TO EXIT AND EXITED MARKET – NOT SHIPS! 23
Slide 24: Today the Low Freight Market Should See the Ships Exit
OBSTACLES TODAY THE LOW FREIGHT MARKET TO EXIT SHOULD SEE THE SHIPS EXIT 30 25 Largely single hull & offshore No of VLCC & Suezmax scrapped per half year 20 15 10 5 0 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 2h 1h 03 03 04 04 05 05 06 06 07 07 08 08 09 0
Slide 25: Fewer Obstacles – Scrap Price Provides Options
OBSTACLES FEWER OBSTACLES – SCRAP PRICE TO EXIT PROVIDES OPTIONS 22 $18.2m 20 Jan -18 18 Scrap Value of VLCC ($m) 16 14 12 10 8 25 Source: Clarksons
Slide 26: Bathtub Remains Dynamic – Timing as Always Is Uncertain
BATHTUB REMAINS DYNAMIC – TIMING AS ALWAYS IS UNCERTAIN RECYCLED $ $ EXITING TANKERS
Slide 27: Tanker Bathtub Remains Unbalanced – but Improving
TANKER BATHTUB REMAINS UNBALANCED – BUT IMPROVING BARRIERS TO ENTRY OBSTACLES TO EXIT • YARD CAPACITY REDUCING BUT… • UTILISATION CHANGES POST 17 YRS • ….CONTRACTING STILL ELEVATED • REGULATIONS TIGHTENING • KOREAN YARDS KEY • FLEET MATURITY DRIVING PIPELINE OF • ORDER BOOK OK – DELIVERY SCHEDULE VE
Slide 28: Tanker Bathtub Unbalanced – but Improving
TANKER BATHTUB UNBALANCED – BUT IMPROVING • Contracting run rate has slowed but need to see sustained CONTRACTING discipline from owners & yards in tanker space ORDER BOOK • At 12% of fleet = manageable; but concentrated delivery schedule will pressure 2018 market OPERATIONAL • Effective change in s