Presentation on theme: "Shipping Industry and market developments 2nd International meeting on ironmaking 1st International symposium on iron ore Vitòria ES 12-15 September 2004."— Presentation transcript:
Shipping Industry and market developments 2nd International meeting on ironmaking 1st International symposium on iron ore Vitòria ES 12-15 September 2004
4 consecutive months of decline Peak in Industrial production growth Jul/Aug If continued,negative for freight market for end 2005 & 2006 OECD lead indicators decline
Generally bullish for Q4 2004 and 1 st half 2005 Steel market very strong Chinese ore demand recovered after blip Growth in Soybean trade Nuclear power stations in Japan to shut down Port congestion increasing. Conclusions
Risks for 2005 –OECD economic slowdown –Slower growth in Chinese ore imports –Fleet expanding fast due to lack of scrapping –Expect correction in freight market by mid 2005 Long term (1 to 5 years) –Contract rates to stay well above historic averages
General comment The rules of the game seem to have permanently changed Is India the next China? As long as the chinese banking system does not collapse, their high pace of growth should be maintained.
(520) (508) (452) (477) (432) (422) (428) (427) (425) (426) (419) (401) (361) (372) (363) (304) Risks of freight exposure are now much greater Freight volatility has increased
Traditional shipping industry Vessel’s cost lower then coa’s revenue Cargo combinations were the sole tool for improvement Derivatives market non existing or with very little liquidity. Limited volatility
The new shipping industry Shipping is traded as a commodity Very large use of derivatives for hedging and speculation. FFA market with extreme liquidity Very high exposure due to market fluctuations and counterparty risk.
High critical mass and financially strong Defines clear medium to long term market views, and behaves accordingly. Plays the short term volatility by going short, or long, very quickly Provides top quality service and flexibility to its clients The modern shipping company
The modern charterer Carefully select his counterparts. Reaches optimum operation management. Starts opening to FFA trade for hedging purposes.