MISC Monthly

April 2018
MISC Financial Calendar
1Q 2018 Quarterly Results Friday,11th May 2018
2Q 2018 Quarterly Results Tuesday, 07th August 2018
3Q 2018 Quarterly Results Tuesday, 20th November 2018
MISC Announcements
Media statement by MISC Berhad - Recent reports regarding the investigation by
the MACC on the Company related to alleged bribery
Proposed renewal of authority for MISC to purchase own shares of up to 10% of
FREIGHT MARKET its prevailing total number of issued shares
Proposed adoption of new constitution of MISC Berhad

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MISC Monthly
April 2018

FREIGHT MARKET
Feb 2018 Mar 2018 1-Month
USD/Day YTD 2018 2017 Avg 2016 Avg
Avg Avg +/-%
LNG
Modern Tonnage
Spot Rates 63,313 42,500 -33% 58,188 42,222 34,796
1 Year Time Charter 65,000 60,000 -8% 61,667 38,824 32,639
3 Year Time Charter 70,000 70,000 - 69,375 58,369 54,079
Steam Engine
Spot Rates 33,750 30,000 -11% 33,583 27,735 26,465
1 Year Time Charter 36,000 35,400 -2% 35,800 26,381 20,194
3 Year Time Charter 34,500 34,500 - 34,500 32,631 29,771
PETROLEUM
VLCC
Spot Rates 5,716 6,224 9% 6,741 18,242 41,363
1 Year Time Charter 22,563 20,500 -9% 22,521 27,143 36,554
3 Year Time Charter 28,750 26,400 -8% 28,050 28,786 33,002
Suezmax
Spot Rates 8,250 10,088 22% 9,039 15,856 27,260
1 Year Time Charter 17,000 16,700 -2% 16,942 18,534 27,299
3 Year Time Charter 21,875 21,300 -3% 21,808 22,507 26,296
Aframax
Spot Rates 9,207 8,899 -3% 9,816 13,933 22,885
1 Year Time Charter 15,000 13,975 -7% 14,700 15,511 21,491
3 Year Time Charter 16,750 17,000 1% 16,833 16,865 20,603
MR2
1 Year Time Charter 13,875 13,700 -1% 13,838 13,219 15,078
CHEMICAL
Spot Rates (USD/Tonne)
Rotterdam - Far East 119 121 2% 118 105 107
Rotterdam-Taiwan 91 92 1% 90 83 80
Gulf-Far East 41 40 -1% 42 37 38
Singapore-Rotterdam 78 78 -0.3% 78 76 76
Time Charter (USD/Day)
1 Year Time Charter
13,000 13,000 - 12,917 13,146 15,513
19,000 dwt
1 Year Time Charter
12,125 11,500 -5% 12,042 11,438 13,995
37,000 dwt

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MISC Monthly
April 2018
ASSET VALUE
Feb 2018 Mar 2018 1-Month
USD ‘Million YTD 2018 2017 Avg 2016 Avg
Avg Avg +/-%
LNG
Newbuild
180 180 - 180 183 196
(DFDE, Atlantic Max)
PETROLEUM
VLCC
Newbuild 83 85 2% 84 80 89
5-Year 62 63 2% 62 61 66
Suezmax
Newbuild 56 58 3% 57 54 57
5-Year 40 42 5% 41 41 47
Aframax
Newbuild 45 45 0.4% 45 44 46
5-Year 30 30 - 30 30 35
CHEMICAL
IMO II 37,000 dwt S/S Coated S/S Coated S/S Coated S/S Coated S/S Coated S/S Coated
Newbuild Prices 47 29 47 31 - 9% 47 29 47 29 49 30
Secondhand Prices - 10 years 33 13 33 14 - 8% 33 13 33 14 36 17

FLEET DEVELOPMENT
Orderbook as
No. of Vessels Current Fleet 2018 2019 2020 2021+ Total Orderbook
% of Fleet
LNG
LNG Carriers 471 42 31 16 1 90 19%
PETROLEUM
VLCC 724 39 46 19 2 106 15%
Suezmax 567 25 19 7 1 52 9%
Aframax 648 53 41 48 14 156 24%

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MISC Monthly
April 2018
INDUSTRY HEADLINES
SHIPPING: Shippers urge caution over trade war threats
Responding to new tariff announcements from the US and counter-measures proposed by the European Union and China, the Global
Shippers’ Alliance which represents major shippers’ organisations from Asia, Europe and the US said it was “by dialogue that countries
and regions should solve problems among themselves”. It added that by collaborating, international trade “can continue and even increase
its ability to generate welfare for the populations”. During its general assembly in Hong Kong this week, the GSA highlighted its concerns
to EU trade commissioner Cecilia Malmström and assured her of the organisation’s “strong support for her efforts to reduce the negative
impact of a trade war between the US and EU”. It said the consequences of such a trade war would certainly spread to other countries and
regions in the world. “Presently 40% of GDP depends on cross-border flows; this was 53% in 2007,” the GSA said. “This so-called de-
globalisation is at least partly the result of protectionist measures.” Additional costs as a result of higher duties, quotas or non-tariff
measures reduce the volume of trade among countries and therefore will have a negative effect on welfare, the organisation noted.
Source: Lloyd’s List

SHIPPING: SEB analyst fires 2020 fuel price warning

A sudden and dramatic shift in demand from high sulphur heavy fuel oil (HSFO) to marine gas oil (MGO) in 2020 is set to widen the price
spread between the two products to more than $450 per tonne according to Bjarne Schieldrop chief commodities analyst at Nordic Bank
SEB. In his extensive report IMO2020 released today, Schieldrop suggests the reluctance of shipowners to comply with the IMO’s
requirement for 0.5% sulphur content fuel by fitting scrubbers will mean a massive shift in demand to MGO and ultra low sulphur fuel oil
(ULSFO) causing the price spike in 2020. Ships with scrubbers burn HSFO and extract the sulphur from the exhaust gas but Schieldrop
estimates that less than 2000 ships will have taken this option by 2020. “As demand for HSFO almost evaporates in 2020 and instead
shifts to ULSFO 0.5% or gasoil, we forecast global refinery upgrading capacity utilization will be stretched to its maximum.
Source: TradeWinds

PETROLEUM: VLCC demolition hitting a peak

Frantic demolition activity involving VLCCs may have finally plateaued, cash buyer GMS says. It follows what analysts describe as a
spectacular start to 2018 for the scrapping of older tankers in a weak market. With Pakistan still closed, demolition prices falling a touch
and fewer end buyers GMS says the market has “finally hit a peak of sorts”. With cash buyers also taking responsibility for gas free for hot
works cleaning on VLCCs already sold for scrap, less funds are available for further buys, GMS adds in its weekly report. As TradeWinds
reported, 17 VLCCs have sold for scrap this year, while rock bottom newbuilding prices have led to new orders for 15 of the tankers.
Analysts at JP Morgan count 16 VLCCs scrapped in 2018. It said the figure pointed to a "pretty spectacular" annualized scrap rate of 8.3%
in the first quarter of the year.
Source: TradeWinds

PETROLEUM: Strong demand of VLCC Tankers in the Middle East and Atlantic Americas reported
Ship owners of the largest tankers, VLCCs have been witnessing some harsh market conditions, which have appeared to ease off, during
the course of the past week. In its latest weekly report, shipbroker CR Weber said that “VLCC rates experienced upward pressure this week
as owners’ confidence was boosted by strong demand in the Middle East and Atlantic Americas regions. The demand gains in these regions
built on strong draws on Middle East tonnage to service West Africa demand over the past two weeks to moderate the extent of surplus
Middle East tonnage”. According to CR Weber, “a strong run in recent demolition sales activity also saw a number of units positioned
between Singapore and Fujairah drop off position lists. Additionally, as charterers progressed into early April Middle East cargoes at the
start of the week, about half of the units available to cover these were disadvantaged. As a result, those requirements that could not work
disadvantaged units lent support to rates for competitive units; the gains did not extend to disadvantaged units and instead created a wider
spread between the two tiers of tonnage.
Source: Hellenic Shipping News Worldwide

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MISC Monthly
April 2018
INDUSTRY HEADLINES
PETROLEUM: Five things to watch: Crude tankers
After a disappointing winter in terms of freight earnings, market sentiment for crude carriers have turned bearish. With the OPEC cut
constraining Middle Eastern exports, bulls are hoping scrapping volume will stay high for the rest of 2018 so oversupply can be curbed.
Most market players hold a dim view over earnings prospects this year even as rising scrapping volume could pave way to recovery.
According to Lloyd’s List’s survey of analysts on forecast earnings, now running quarterly, spot time-charter equivalent rates of very large
crude carriers will average $20,324 per day this year, down from $26,240 in the previous prediction. Forecast suezmax TCE rates dropped
to $15,918 per day from $19,012, while those for aframaxes fell to $14,266 from $15,648. The main reason behind those downbeat forecasts
remains oversupply. The number of newbuilding deliveries remains high, and some orders are emerging; the pick-up in scrapping volume
has triggered optimism in some quarters, but the volume is still too small to aid the rate environment. There is little good news on the
vessel demand side, either.
Source: Lloyds List

PETROLEUM: Cheaper US crude loading logistics likely to lure more Asian buyers
Apart from competitive spot price indications, lower cost of oil transportation from the US Gulf Coast to the Far East could provide Asian
refiners with more reason to shop for US crude oil going forward, as a few loading terminals in the USGC expect to handle large dirty
tankers in the coming years. The successful VLCC crude loading operation at the Louisiana Offshore Oil Port last month would further
boost Asian end-users’ interest in US crude as logistics costs could be cut significantly, industry sources said. Shell was responsible for
the recent VLCC loading of crude at the LOOP terminal and the new logistics option will set the tone for US-Asia crude flows to become
the “new normal,” Mark Quartermain, vice president of crude trading and supply at the oil major said at the S&P Global Platts Asian
Refining Summit in Singapore
Source: Platts

LNG: U.S. liquefied natural gas exports quadrupled in 2017

U.S. exports of liquefied natural gas (LNG) reached 1.94 billion cubic feet per day (Bcf/d) in 2017, up from 0.5 Bcf/d in 2016. As LNG
exports increased, shipments went to more destinations. U.S. LNG exports in 2017, all of which originated from Louisiana’s Sabine Pass
liquefaction terminal, reached 25 countries. More than half (53%) of U.S. LNG exports in 2017 were shipped to three countries: Mexico,
South Korea, and China. Mexico received the largest amount of U.S. LNG exports, at 20% of the 2017 total. Growing natural gas demand
in Mexico, particularly from the power generation sector, and delays in the construction of domestic pipelines connecting to U.S. export
pipelines led Mexico to rely on LNG imports to supplement imports of natural gas by pipeline. In Asia, the widening difference between the
Henry Hub natural gas price—to which U.S. LNG contract prices are indexed—and crude oil—to which LNG prices are benchmarked in
Asia—helped to drive increases in LNG imports from the United States.
Source: EIA

LNG: Singapore could still thrive as regional LNG trading hub

Singapore’s success as an evolving Asian LNG trading hub will likely rely on the growth of the small-scale LNG market in southeast Asia
over the medium term. The market size for southeast Asia is forecast to grow by around 71mtpa by 2035 in an annual LNG outlook that
Anglo-Dutch energy major Shell published in March 2018. Southeast Asia will become a net LNG importer by 2035, with Indonesia – the
largest economy in the region – alone requiring 30mtpa by that year, Shell said at an industry event on 8 March. Many companies see the
region as key to creating new LNG demand. Small LNG vessels are needed to deliver to the remote areas not linked to a gas grid. An ideally
placed receiving terminal that can break conventional-sized cargoes into smaller volumes to supply those areas is at an advantage. The
Singapore LNG (SLNG) terminal is being heavily promoted as that connection point for southeast Asia. Singapore is already providing
break-bulk, bunkering and reloading services.
Source: ICIS

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MISC Monthly
April 2018
INDUSTRY HEADLINES
LNG: Orders forecast to reach 50 in 2018
The number of LNG carrier newbuildings placed this year is forecast to hit the half century mark, according to one South Korean analyst.
“We raise our 2018 global LNG order forecast from 40 to 50 vessels,” said NH Investment & Securities analyst John Yu. “Thanks to the
growing dependence of China on LNG spot markets, short-term charter rates should remain strong through 2020, a positive for the LNG
carrier market.” Yu said China over took South Korea in 2017 to become the world’s second largest LNG importer behind Japan. It imports
rose 44% year-on-year to 38mt, or 15% of the global market. “In 2017, China’s spot LNG imports spiked 400% year-on-year, due mainly
to the fact that while China’s energy policy focus has rapidly shifted towards natural gas, the country still lacks key infrastructure, such as
LNG storage facilities,” says Yu. He says that if China possessed sufficient storage facilities, its LNG imports would stabilize through long-
term contracts, including during the low summer season.
Source: TradeWinds

LNG: Market more inclined towards smaller-scale projects

The liquefied natural gas (LNG) business is leaning towards smaller-scale projects with lesser volumes amid soft and challenging market
sentiment for the energy sector. Petroliam Nasional Bhd (PETRONAS) VP of LNG Assets, upstream, Adnan Zainal Abidin said there was a
big fundamental shift in the LNG market with buyers now seeking more flexibility in contracts — comprising smaller parcels and volumes
with shorter contract tenure in a paradigm of abundance in supply. “The days of having huge long- term contracts are getting more difficult.
The buyers want to wait-and-see how the market pans out,” he said at a panel session during the Offshore Technology Conference Asia —
special session on floating LNG (FLNG) in Kuala Lumpur yesterday. “I think the smaller FLNG trains of around two million tonnes would
be perfect in this current market scenario because we would not be seeing any 20-year contract tenure anymore in the immediate future,”
he added. Adnan said buyers are looking for three- to five-year supply contract period.
Source: The Malaysian Reserve

SHIPYARD: Sink or sail? – Shipbuilders face critical point for survival

The nation’s shipbuilding industry officials are maintaining a cautious outlook, despite growing expectations about recovery following an
increase in the number of orders that shipbuilders have obtained this year. Although global market conditions seemingly support the
optimism, they have mentioned government support, global environmental regulations and steel plate prices as significant factors which
will determine the destiny of domestic shipbuilders. According to industry officials, Sunday, the nation’s top three shipbuilders have won
53 contracts worth $5 billion this year, 25 percent of the total value of orders last year. The big three shipbuilders have been proving their
competitiveness in the global LNG carrier market. Also, the outlook for the global shipbuilding market is bright, according to Clarkson
Research. The U.K.-based institute specializing in analysis of the shipping and shipbuilding businesses expects orders for 1,134 ships will
be made this year and 1,444 ships next year, up from 993 last year.
Source: Korea Times

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