OUTLOOK FOR 2050.000 DWT PRODUCT TANKERS

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INTERTANKO 24.OKTOBER 2001
OUTLOOK FOR 20/50.000 DWT PRODUCT TANKERS
FINN ENGELSEN JR
LORENTZEN STEMOCO AS
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HOW CAN YOU FORECAST ANYTHING DURING THESE
UNCERTAIN TIMES ?
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UNDERSTANDING THE PRESENT IS THE KEY
TO FORECASTING THE FUTURE!
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• ELEMENTS OF FORECASTING
• The basic picture
• Trade generating factors
• Shipping consequential analysis

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THE BASIC PICTURETHE WORLD POLITICAL
SITUATIONTHE GENERAL ECONOMIC OUTLOOKREGIONAL
ECONOMIC GROWTH

• .

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• THE BASIC PICTURE
• THE WORLD POLITICAL SITUATION
• THE GENERAL ECONOMIC OUTLOOK
• REGIONAL ECONOMIC GROWTH
• THE COST OF ENERGY
• OPECS MANAGEMENT OF THE OIL PRICE

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• CAPACITY STUDIES AND PRODUCT BALANCES

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES
• TRADE ANALYSIS

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• TRADE GENERATING FACTORS
• DEVELOPMENTS IN WORLD OIL DEMAND
• TRENDS IN WORLD OIL REFINING
• ANALYSIS OF REQUIRED PRODUCT SPECIFICATIONS
• REGIONAL CAPACITY STUDIES AND PRODUCT BALANCES
• TRADE ANALYSIS

• US IMPORTS GASOLINE
• EUROPE IMPORTS JET/KERO
• BOTH US/EUROPE IMPORT HEATING OIL
• ASIA IMPORTS NAPHTA

• ASIA REQUIRES NAPHTA FROM MEG, BUT IS SURPLUS
  LOWGRADE
• GASOLINE/GASOIL
• MEG EXPORTS LOW GRADE
• GASOILJET TO ATLANTIC BASIN

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TRADE GENERATING FACTORS US natural gas - low
production and very tight stocks caused prices to
rise sharply last winter
Henry Hub Natural Gas
USG 1 pct Fuel oil
..Recent high filling rates suggests a better
balance
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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND
• ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE
  ASSESSMENT

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND
• ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE
  ASSESSMENT

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND
• ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE
  ASSESSMENT

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• SHIPPING CONSEQUENTIAL ANALYSIS
• INITIAL ASSESSMENT OF DEMAND
• ARBITRAGE ANALYSIS AND INITIAL FREIGHT RATE
  ASSESSMENT
• DETAILED KNOWLEDGE OF FLEETSTRUCTURE
• SIZE AGE DISTRIBUTION
• OWNERSHIP
• FUTURE FLEETDEVELOPMENT
• NEWBUILDING DELIVERIES
• ANTICIPATED SCRAPPING

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SHIPPING CONSEQUENTIAL ANALYSIS
Current fleet size 917 / 33,32 mill dwt. (12 OBO
carriers) Newbuildings on order 162 / 6,4 mill
dwt There are 64 vessels / 2,4 mill dwt under US
Flag. Nr. of units to be phased out by 2003
58 2004 84 2005 78 2006 59 Total
vessels to be phased out 2003-2006 281 vessels
/ 8,83 mill dwt.

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• SHIPPING CONSEQUENTIAL ANALYSIS (CONTINUED)
• MARKETBALANCE RATEFORECAST

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• HANDY PRODUCT CARRIERS EVENT SHEET
• 1997 THE END OF THE ASIA BOOM
• 1998 VERY DRAB MARKET CAUSED BY
• COLLAPSE IN ASIAN DEMAND
• 1999 EVEN MORE DRAB MARKET CAUSED
• BY CONTINUED SLACK DEMAND AND
  OVERSUPPLY
• 2000 BIG RECOVERY DUE TO LOW PRODUCT STOCKS AND
  HUGE US GAS SUBSTITUTION DEMAND
• 2001 GLORIOUS START, MASSIVE ORDERING FOLLOWED
• BY DRAB END
• 2002 VERY WEAK DEMAND, SCRAPPING ACCELERATES BUT
  THE
• FLEET IS GROWING
• 2003 US/ASIA RECOVER CAUSING SWIFT UPSWING IN
  DEMAND
• AND RATES
• 2004 DEMAND STABILIZES AS THE FLEET CONTINUE TO
  GROW.
• 2005 LETS HOPE ITS OK..

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THANK YOU
FOR YOUR ATTENTION
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YOUR FUTURE
OUR CHALLENGE
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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST
• ANALYSIS OF FORWARD COVER

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST
• ANALYSIS OF FORWARD COVER
• EVALUATION OF SHIPBUILDING CURRENCIES

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST
• ANALYSIS OF FORWARD COVER
• EVALUATION OF SHIPBUILDING CURRENCIES
• REGIONAL CAPACITY ANALYSIS

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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST
• ANALYSIS OF FORWARD COVER
• EVALUATION OF SHIPBUILDING CURRENCIES
• FORECAST NEWBUILDING PRICES

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• PROVIDE ADVISE
• INVESTMENT STRATEGIES
• BUY OR SELL TONNAGE
• NEWBUILDING OR SECONDHAND?
• CHARTER IN OR OUT
• TIMING
• HEDGING STRATEGIES

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ARE JAPANESE BUILDERS GOING TO SUFFER MORE THAN
KOREAN BUILDERS ?
LET US LOOK AT THE CROSS YEN/WON...
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• FURTHER CONSEQUENTIAL SHIPPING ANALYSIS
• DO WE HAVE SUFFICIENT SHIPBUILDING CAPACITY ?
• PRODUCTION FORECAST
• ANALYSIS OF FORWARD COVER
• EVALUATION OF SHIPBUILDING CURRENCIES
• FORECAST NEWBUILDING PRICES

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KOREAN YARDS MAINTAIN A COMPETITIVE ADVANTAGE
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INVESTMENT IN 5 YEAR OLD TONNAGE IS INTERESTING
IF YOU ARE ON THE RIGHT SIDE OF THE CYCLE...
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THREE PREREQUSITES FOR STABILE BUILDING PRICES
?
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LORENTZEN STEMOCO AS
BROKERS AND CONSULTANTS FOR THE SHIPPING INDUSTRY
OSLO SINGAPORE SHANGHAI
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• THE BASIC PICTURE
• THE WORLD POLITICAL SITUATION
• THE GENERAL ECONOMIC OUTLOOK
• REGIONAL ECONOMIC GROWTH
• THE COST OF MONEY

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WHY DO WE NEED SHIPPING ANALYSTS ?
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IF YOU ARE NOT A BUYER YOU ARE A SELLER
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TO EXPLAIN WHY THINGS DID NOT DEVELOP AS
THEY PREDICTED?