The Deep Sea Chemical Carrier Market Richardson Lawrie Associates - PowerPoint PPT Presentation

Private and Confidential The Deep Sea Chemical Carrier Market Richardson Lawrie Associates Ltd Maritime Economists & Business Consultants Website: www.richardsonlawrie.com Annual Meeting - "Disruption-Decarbonisation- Data“ Athens, May 2019 This paper is specifically for the use of delegates attending this course and shall be used for no other purpose without the written permission of Richardson Lawrie Associates Ltd. No part of this paper may be reproduced, transmitted, transcribed or stored in a retrieval system without the prior written permission of Richardson Lawrie Associates Ltd. Source: Richardson Lawrie Associates Ltd

Private and Confidential Private and Confidential Richardson Lawrie Associates Ltd Established in 1987, Richardson Lawrie Associates Ltd (RLA) is an independent firm of international maritime economists and business consultants Sectors Services ▪ Crude Oil ▪ Regular market analyses and forecasts ▪ Petroleum Products ▪ Shipping pool revenue distribution systems ▪ LPG ▪ Commercial and contract advice ▪ LNG ▪ Project development and implementation ▪ Petrochemicals ▪ Feasibility, due diligence and logistics studies ▪ Dry Bulk ▪ Financial appraisals ▪ Containers ▪ Management training ▪ Ports and Terminals ▪ Expert witness advice It has a close association with Wade Maritime in Singapore/India; maritime consultants offering a range of services including operational risk management; specialist training; audits and inspections; claims and dispute advisory services Source: Richardson Lawrie Associates Ltd

Private and Confidential Private and Confidential Wade Maritime Network Wade Maritime’s network of associates supports RLA’s global reach Source: Richardson Lawrie Associates Ltd

Private and Confidential The Chemical Carrier Sector • Deep Sea Chemical Trade • Major Players in the Market • Capacity Developments • Vessel Demand • The Fleet • Rates and Earnings Source: Richardson Lawrie Associates Ltd

Private and Confidential Composition of Chemical Carrier Trade: 5 main Groups But Hundreds of Products 1991 Total = 36 mln tonnes 34% Commodity 23% Natural Chemicals Products 9% Caustic Soda 2018 Solution 19% 15% Speciality Total = 124 mln tonnes Inorganic Chemicals 16% Natural Acids Products 50% Commodity 7% Caustic Soda Chemicals Solution 9% Inorganic Acids 19% Speciality Chemicals Source: Richardson Lawrie Associates Ltd

Private and Confidential Organic Chemicals, Caustic and Acid Trade Imports % Change p.a. 110000 14 13 100000 12 11 90000 10 80000 After a recovery in trade in 2010 of 9 8 70000 000 Tonnes 7 12.5%, growth has been limited 60000 6 5 50000 4 40000 3 2 30000 1 20000 0 -1 10000 -2 Exports 0 -3 1995 2000 2007 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % Change p.a. USA South America Europe North East Asia 110000 14.0 China Other Asia Others Rate of change 13.0 100000 12.0 11.0 90000 10.0 80000 Trade moved between 94 to 96 million tonnes 9.0 8.0 70000 between 2011 and 2015. In 2016 it reached 97 million 000 tonnes 7.0 60000 6.0 tonnes and steadily grew to 104 million tonnes in 5.0 50000 4.0 2018. 40000 3.0 2.0 30000 1.0 20000 0.0 -1.0 10000 -2.0 0 -3.0 1995 2000 2007 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Canada W.C USA South America EC Europe Middle East Others Asia Caribs/Central America South America WC N. Africa Rate of change Source: Richardson Lawrie Associates Ltd

Private and Confidential Trade is Impacted by Growth But with Time Shifts and Large Variations in Scale 14% 12% 10% Ch Chemica cals ls trade ade 8% 6% increa eases ses from m 4% -1% to 13% year ear 2% 0% on year -2% -4% -6% All Bulk Liquid Chemicals OECD GDP Asia GDP Source: Richardson Lawrie Associates Ltd

Private and Confidential Comparison of US Deep Sea Commodity Chemicals Exports and Imports ` 12000 US Deep Sea Exports as a Percentage of Total US Exports - Deep sea exports of commodity chemicals marginally 73% 65% 56% 56% 58% 64% 67% 65% 64 % increased in 2017 after increasing significantly in 2016. 2018 Acrylonitrile was comparatively a better year rising by 13% year on year 10000 Benzene Ethanol - Main drivers of change were ethanol and methanol 8000 Ethylene Dichloride - Proportions of US chemicals exported deep sea to total Ethylene Glycol exports have been on average 65% since 2015 6000 Methanol MTBE/ETBE 000 Tonnes 12000 US Deep Sea Imports as a Percentage of Total US Imports Other Xylenes 4000 Acrylonitrile 82% 82% 80% 86% 89% 87% 86% 84% 84% Paraxylene 10000 Benzene Styrene Ethanol 2000 8000 Toluene Ethylene Dichloride Ethylene Glycol 0 6000 2000 2007 2012 2013 2014 2015 2016 2017 2018 Methanol Year MTBE/ETBE 4000 - There has recently been a slowdown in deep sea import Other Xylenes volumes for commodity chemicals. 2018 imports were down 4% year on year 2000 Paraxylene Styrene - Fall in methanol volumes has lead to lower deep sea 0 Toluene 2000 2007 2012 2013 2014 2015 2016 2017 2018 imports. Year - US imports for commodity chemicals have been heavily reliant on deep sea sources Source: Richardson Lawrie Associates Ltd

Private and Confidential Natural Gas Price Trends vs US Deep Sea Organic Chemical Exports & Natural Gas Production Index Year 1997=100 $/MMBTU 300 10 9 250 8 7 200 6 5 150 4 3 100 2 1 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 US Natural Gas Production US Deep Sea Comm Chem Export US Deep Sea Speciality Chemicals Export US Deep Sea Comm Chem Import US Deep Sea Speciality Chemicals Import Natural Gas Price Lower US gas prices leads to rising commodity chemicals exports and declining imports Source: Richardson Lawrie Associates Ltd

Private and Confidential Natural Gas Price Trends vs US Deep Sea Commodity Chemicals (Excluding Ethanol) Trade & Natural Gas Production Index Year 1997=100 $/MMBTU 250 10 9 8 200 7 6 150 5 4 3 100 2 1 50 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 US Natural Gas Production US Commodity Chemicals Deep Sea Export US Commodity Chemicals Deep Sea Import Natural Gas Price Underlying trends for commodity petrochemicals becomes clearer Source: Richardson Lawrie Associates Ltd

Private and Confidential USA Plants and Projects 2019-2023 Base Case 14000 12000 Toluene Sulphuric Acid USA Base Case Capacity between 2019 and 2023 10000 Styrene is over 31 million tonnes Paraxylene 8000 Phosphoric Acid Methanol accounts for 84% or 26 million tonnes 000 Tonnes Other Xylenes 6000 MTBE Methanol 4000 Upside Case Ethanol 3500 Ethylene Glycol 2000 Toluene Ethylene Dichloride Sulphuric Acid 3000 Benzene 0 Styrene 2019 2020 2021 2022 2023 Acrylonitrile Paraxylene 2500 Phosphoric Acid -2000 000 Tonnes Other Xylenes 2000 Commissioning Year MTBE Methanol 1500 Ethanol There is a further 5.3 million tonnes of Upside Ethylene Glycol 1000 Case capacity majority of which is methanol Ethylene Dichloride 500 Benzene Acrylonitrile 0 2019 2020 2021 2022 2023 Commissioning Year Source: Richardson Lawrie Associates Ltd

Private and Confidential Middle East Deep Sea Organic Exports -Exports of organic chemicals increased to 32 million tonnes in 000 Tonne 40000 2015 from 15 million tonnes in Speciality Chemicals Commodity Chemicals 35000 2008. 30000 25000 -Main drivers were methanol and 20000 ethylene glycol 15000 10000 5000 -After a slowdown in 2016, 0 exports of organic chemicals 08 09 10 11 12 13 14 15 16 17 18 have increased to 33 million tonnes in 2018 Source: Richardson Lawrie Associates Ltd

Private and Confidential Middle East Plants and Projects 2019-2023 Base Case 000 tonnes UAE Middle East Base Case capacity is nearly 13 million Saudi Arabia tonnes of which paraxylene is 5 million tonnes and methanol is 3.5 million tonnes Qatar Oman Kuwait Iran Upside Case Bahrain 000 tonnes 0 1000 2000 3000 4000 5000 6000 Acrylonitrile Benzene Ethylene Dichloride Ethylene Glycol Ethanol Methanol MTBE Other Xylenes Phosphoric Acid Paraxylene UAE Styrene Sulphuric Acid Toluene Saudi Arabia Qatar Oman Middle East Upside Case capacity is nearly 28 Kuwait million tonnes; 23 million tonnes from Iran Iran Bahrain 0 5000 10000 15000 20000 25000 Acrylonitrile Benzene Ethylene Dichloride Ethylene Glycol Ethanol Methanol MTBE Other Xylenes Phosphoric Acid Paraxylene Styrene Sulphuric Acid Toluene Source: Richardson Lawrie Associates Ltd

Private and Confidential Chinese Deep Sea Imports 000 Tonne China Deep Sea Imports 35000 Growth 2010 - 2018 (%p.a) 30000 25000 Commodity Chemicals 5.2% 20000 Speciality Chemicals -4.4% 15000 Inorganic Acids -2.7% 10000 Caustic Soda Solution 45.7% 5000 Total 3.8% 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Commodity Chemicals Speciality Chemicals Inorganic Acids Caustic Soda Solution Source: Richardson Lawrie Associates Ltd

Private and Confidential Short Sea Chemical Trade by Product Group 000 tonne 140000 120000 100000 80000 60000 40000 20000 0 2012 2013 2014 2015 2016 2017 2018 Commodity Chemicals Speciality Chemicals Inorganic Acids Caustic Soda Solution Source: Richardson Lawrie Associates Ltd