Table of contents
GLOBAL MACROECONOMIC ASSUMPTIONS......................................8
A STRONG REBOUND IS EXPECTED 8
NO DRAMATIC CHANGES IN ORDER BOOKS, BUT UNCERTAINTY ABOUT DELIVERY IS PRESENT 8
CRUDE TANKER.............................................................................10
VOLATILITY REMAINS, BUT OVERALL SUBDUED FLEET UTILIZATION 10
A JUMP IN OIL CONSUMPTION PROJECTED THIS YEAR 11
WHILE WAITING FOR THE US, NON-OECD IS STILL IN THE “DRIVING SEAT” 12
IMPROVED FORECASTING CONFIDENCE, BUT UNCERTAINTY STILL EVIDENT 13
CALL-ON-OPEC SET TO RISE BASED ON HIGHER OIL DEMAND … 14
BUT INVENTORY SITUATION SHOULD BE TAKEN INTO ACCOUNT 15
REFINERY RUNS LIKELY TO REMAIN SUBDUED IN THE OECD 16
CRUDE TANKER MARKET WITH LITTLE HELP FROM OPEC 17
THE STORAGE CONTRIBUTION COULD SWING IN EITHER DIRECTION 18
ORDER BOOK HIGHLIGHTS THE NEED FOR SCRAPPING AND BOOSTED TRADE FLOWS 19
IMO PHASE-OUT COULD INDUCE HISTORICAL HIGH SCRAPPING ACTIVITY 19
CRUDE TANKER SECTOR; FUNDAMENTAL OUTLOOK 21
ASSET PRICES LIKELY TO REMAIN RATHER SUBDUED 21
CRUDE TANKERS; SECTOR PRICING AND RECOMMENDATION STRUCTURE 22
DRY BULK SHIPPING.....................................................................24
DRY BULK SHIPPING MARKET SURPRISED ON THE UPSIDE IN 2009 24
TURNAROUND IN NON-OECD KEY, WITH CHINA LEADING THE WAY 25
THE CONSTRUCTION MARKET IN PARTICULAR HAS SEEN AN EXTREME TURNAROUND 26
SUBSTANTIAL LENDING GROWTH HAS ALSO CONTRIBUTED 27
WITH CHINESE STEEL OUTPUT REACHING NEW HIGHS 28
AND A FURTHER INCREASE IS PROJECTED IN 2010 29
HISTORICAL STEEL NUMBERS GIVE INTERESTING CHINA MATHS 30
COMING FROM AN ALREADY EXTREME VOLUME BASE 31
WITH THE BIG THREE PRODUCING COUNTRIES DICTATING THE MARKET 32
HIGH SCENARIO CREATING A SUBSTANTIAL NEED FOR SHIPPING SERVICES 33
STEEL PRICES STILL KEY FOR SEABORNE TRANSPORTATION RATES 34
AND INVENTORIES MUST BE MONITORED 35
COAL CONSUMPTION GROWTH CHANGING GEAR 36
WITH CHINA AGAIN IMPACTING THE SHIPPING MARKET 37
CREATING ADDITIONAL TONNAGE DEMAND 38
NO DRAMATIC CHANGES IN ORDER BOOK 39
SLIPPING WILL HOWEVER IMPACT FLEET GROWTH 39
AND PORT CONGESTION COULD CONTINUE TO TIE UP TONNAGE 40
DRY BULK SHIPPING SECTOR: FUNDAMENTAL OUTLOOK 41
ASSET PRICES WILL CONTINUE TO MOVE WITH EARNINGS PROJECTION 42
HIGH CONTRACT COVERAGE MITIGATES IMPACT OF SPOT RATE FLUCTUATIONS 43
COMPANY VALUATION STILL DEPENDENT ON FIXED REVENUE STREAMS 43
DRY BULK CARRIERS: SECTOR PRICING AND RECOMMENDATION STRUCTURE 44
CHEMICAL/CPP TANKER................................................................45
EARNINGS HAVE REMAINED WEAK AFTER SPRING UPTURN 45
DESPITE THE JUMP IN MACROECONOMIC ACTIVITY 46
GLOBAL PRODUCTION RETURNING, BUT A LONG WAY TO GO 47
IMPACTING SEABORNE TRADE VOLUMES 48
SHIPOWNER RETURNS WILL ALSO BE AFFECTED BY FUEL EXPENSES 49
CPP INVENTORIES AND TANKER STORAGE MUST BE MONITORED 50
BUT TRANSPORTATION DISTANCES SHOULD RISE OVER THE NEXT FEW YEARS 51
ORDER BOOK FOR 2010 LOOKS CHALLENGING BUT DELAYS/SCRAPPING HELPS 52
A SIMILAR PICTURE FOR CPP TANKERS DESPITE IMO PHASE-OUT 52
DEMOLITION SHOULD BE MAINTAINED AT ELEVATED LEVELS 53
CHEMICAL/CPP SHIPPING SECTOR: FUNDAMENTAL OUTLOOK 54
CHEMICAL/CPP TANKERS: SECTOR PRICING AND RECOMMENDATION STRUCTURE 55
LPG/LNG TANKER..........................................................................56
THE FRAGILE OPERATING ENVIRONMENT HAS CONTINUED 56
PRODUCTION AND CONSUMPTION IMBALANCE CREATES SHIPPING NEEDS 57
MACROECONOMIC ACTIVITY KEY FOR SHIPPING FUNDAMENTALS 58
ALTHOUGH LPG SHIPPING IS A HIGHLY PRODUCT DRIVEN MARKET 59
SUBSTANTIAL FLEET EXPANSION HAS MOREOVER NOT HELPED 60
DRAMATIC RISE IN NATURAL GAS AND OIL PROCESSING EXPECTED 61
AMMONIA TRADE MOREOVER IMPORTANT FOR FLEET UTILIZATION 62
RAPID VOLUME EXPANSION SHOULD SIGNIFICANTLY LIFT SHIPPING REQUIREMENTS 63
INVENTORY SITUATION MUST BE TAKEN INTO ACCOUNT 64
LACK OF ORDERING CREATES A “HALT” IN FLEET GROWTH 65
ASIA KEY FOR LNG IMPORTS 65
LNG TRADE FLOWS PROJECTED TO RISE SUBSTANTIALLY 66
AND THUS POSITIVELY IMPACT THE MARKET BALANCE IN SHIPPING 67
BUT TON-MILE DEMAND STILL FRAGILE 68
AS HIGH US NATURAL GAS INVENTORIES CREATE FEW TRADE INCENTIVES 69
DELIVERY SCHEDULE SHOULD INDUCE TIGHTER MARKET FUNDAMENTALS 70

LPG/LNG SHIPPING SECTOR: FUNDAMENTAL OUTLOOK 71
LPG/LNG SHIPPING: SECTOR PRICING AND RECOMMENDATION STRUCTURE 72
CONTAINER SHIPPING..................................................................73
LOOKS CAN BE DECEIVING! 73
US ECONOMIC SNAPSHOT 74
US CONSUMPTION VS. CHARTER RATES – REVISITED 75
YEAR OVER YEAR GROWTH IS AGAIN POSITIVE, VERY STRONG SEASONALITY FOR Q409 75
EMU ECONOMIC SNAPSHOT 76
ASIAN INDUSTRIAL PRODUCTION REBOUNDING 77
FLEET PROFILE – CONTAINER FLEET 78
TRADE LANE EXPOSURE BY OPERATOR AND IDLE FLEET 78
FREIGHT RATE ASSUMPTIONS… 79
CONTAINER SHIPPING SECTOR: FUNDAMENTAL OUTLOOK 80
CONTAINER SHIPPING: SECTOR PRICING AND RECOMMENDATION STRUCTURE 80
REEFER SHIPPING.........................................................................82
A SECTOR DEPENDENT ON THE HIGH SEASON… 82
FLEET PROFILE – SPECIALIZED REEFERS 83
DEMAND DRIVERS 84
REEFER SHIPPING SECTOR: FUNDAMENTAL OUTLOOK 84
REEFER SHIPPING SECTOR: SECTOR PRICING AND RECOMMENDATION STRUCTURE 85
APPENDICES.................................................................................86

Table of figures
Figure 1: GDP Growth Estimates.........................................................8
Figure 2: Orderbook for various fleet types...........................................8
Figure 3: VLCC average spot earnings.................................................10
Figure 4: Suezmax average spot earnings...........................................10
Figure 5: Oil demand vs. GDP Growth.................................................11
Figure 6: World Oil Demand 2009-2010..............................................11
Figure 7: Global oil demand growth by year, 1987-2009........................12
Figure 8: Global oil demand growth by year, 2003-2009........................12
Figure 9: IEA oil demand growth forecast vs. realized...........................13
Figure 10: IEA non-OPEC supply growth forecast vs. realized.................13
Figure 11: Yearly call on OPEC...........................................................14
Figure 12: 2009/2010 Call on OPEC....................................................14
Figure 13: OECD Total Industry Stocks................................................15
Figure 14: DnB NOR Markets World Oil Supply-Demand Balance.............15
Figure 15: OECD Total Refinery Runs (IEA)..........................................16
Figure 16: OECD Pacific Total Refinery Runs (IEA)................................16
Figure 17: OPEC oil production vs. VLCC rate.......................................17
Figure 18: VLCC spot tanker fixtures in the Arabian Gulf........................17
Figure 19: VLCCs used in short term oil storage...................................18
Figure 20: Historic Brent oil price & outlook.........................................18
Figure 21: Tanker fleet statistics........................................................19
Figure 22: VLCC scrapping vs. average VLCC spot rates.........................19
Figure 23: Biggest users of single hull vessels, 2009.............................20
Figure 24: Large crude tanker demolition, 1970-2010...........................20
Figure 25: Demand & supply balance, crude tankers.............................21
Figure 26: VLCC newbuild price development vs. 2nd hand value.............21
Figure 27: Aframax newbuild price development vs. 2nd hand value.........22
Figure 28: Key figures and valuations - Crude tanker............................23
Figure 29: Average Spot Earnings for Capesize.....................................24
Figure 30: Average Spot Earnings for Panamax....................................24
Figure 31: Development in Industrial Production...................................25
Figure 32: China business surveys, overall...........................................25
Figure 33: China business surveys, real estate.....................................26
Figure 34: China business surveys, construction...................................26
Figure 35: Total loans in China...........................................................27
Figure 36: Loan growth vs. fixed investments construction.....................27
Figure 37: Chinese monthly steel production........................................28
Figure 38: World Steel Production......................................................28
Figure 39: World steel capacity 2008-2009..........................................29
Figure 40: World steel production (including forecasts)..........................29
Figure 41: Steel consumption history for various countries.....................30
Figure 42: China iron ore import potential...........................................30
Figure 43: Chinese monthly iron ore imports........................................31
Figure 44: Chinese monthly iron ore production....................................31
Figure 45: Iron ore export development, 1996-2009.............................32
Figure 46: World iron ore export 2008................................................32
Figure 47: Shipping requirement escalation.........................................33
Figure 48: Chinese steel prices vs. Capesize rates................................34
Figure 49: Chinese steel futures prices................................................34
Figure 50: Chinese iron ore inventories, 2006 – 2010 YTD.....................35
Figure 51: Chinese steel inventories, 2006-2010 YTD............................35
Figure 52: Main contributors to global coal production...........................36
Figure 53: Main contributors to coal consumption.................................36
Figure 54: China coal export/import 2000-2009...................................37
Figure 55: China net coal trade balance vs. Panamax rates....................37
Figure 56: Shipping requirements, China net coal.................................38
Figure 57: Dry bulk fleet statistics......................................................39
Figure 58: Dry bulk carrier scrapping, 1970-2009 YTD...........................39
Figure 59: Slippage in newbuild deliveries, 2009...................................40
Figure 60: Dry bulk shipping port congestion.......................................40
Figure 61: Port congestion vs. rates....................................................41
Figure 62: Demand and supply balance, dry bulk shipping.....................41
Figure 63: Capesize newbuild price development vs. 2nd hand value........42

Figure 64: Panamax newbuild price development vs. 2nd hand value........42
Figure 65: Contract coverage 2009/2010/2011....................................43
Figure 66: Net Asset Values (NAV) for dry bulk companies.....................43
Figure 67: Key figures and valuations – Dry bulk..................................44
Figure 68: Average chemical spot rate................................................45
Figure 69: Average Earnings of Ras Tanura Chiba Clean 75k..................45
Figure 70: Macroeconomic developments vs. shipping rates...................46
Figure 71: Selected non-OECD industrial production vs. shipping rates....46
Figure 72: US manufacturing chemicals index, 1999-2010 YTD...............47
Figure 73: China chemical inventory change........................................47
Figure 74: Seaborne trade organic chemicals.......................................48
Figure 75: World GDP growth vs. change in chemical trade volume.........48
Figure 76: Average bunker price development......................................49
Figure 77: Historic Brent oil price & outlook.........................................49
Figure 78: US Distillate stocks...........................................................50
Figure 79: China petroleum inventory change......................................50
Figure 80: Global refinery capacity additions........................................51
Figure 81: Chemical tanker fleet statistics...........................................52
Figure 82: Product tanker fleet statistics.............................................52
Figure 83: Chemical tanker scrapping vs. spot rates..............................53
Figure 84: Product tanker scrapping vs. spot rates................................53
Figure 85: Demand & supply balance, chemical tankers.........................54
Figure 86: Demand & supply balance, product tankers..........................54
Figure 87: Key figures and valuations – Chemical/CPP...........................55
Figure 88: LPG VLGC Rates...............................................................56
Figure 89: Modern 59K CBM LPG 12 Month TC Rate..............................56
Figure 90: LPG production and consumption........................................57
Figure 91: LPG consumption by usage.................................................57
Figure 92: LPG demand OECD vs. industrial production.........................58
Figure 93: VLGC rates vs. non-OECD IP..............................................58
Figure 94: OECD crude production vs. LPG shipping rates......................59
Figure 95: Seaborne LPG trade vs. rates.............................................59
Figure 96: VLGC rates vs. fleet..........................................................60
Figure 97: MGC rates vs. fleet...........................................................60
Figure 98: LNG production growth 2007-2015......................................61
Figure 99: DnB NOR Markets forecast call-on-OPEC..............................61
Figure 100: LPG Tanker Cargoes........................................................62
Figure 101: Seaborne ammonia trade vs. rates....................................62
Figure 102: Incremental seaborne LPG trade growth.............................63
Figure 103: Incremental seaborne ammonia trade growth......................63
Figure 104: Japanese LPG Stocks.......................................................64
Figure 105: US propane/propylene stocks............................................64
Figure 106: LPG fleet statistics...........................................................65
Figure 107: Major LNG exporters 2008................................................65
Figure 108: Major LNG importers 2008................................................66
Figure 109: World LNG consumption...................................................66
Figure 110: Expected world LNG demand............................................67
Figure 111: LNG production growth....................................................67
Figure 112: Projects driving LNG availability........................................68
Figure 113: US LNG consumptions......................................................68
Figure 114: US LNG import price........................................................69
Figure 115: US natural gas inventories................................................69
Figure 116: European gas inventories.................................................70
Figure 117: LNG fleet statistics..........................................................70
Figure 118: LNG fleet – age profile.....................................................71
Figure 119: Demand & supply balance for LPG carriers..........................71
Figure 120: Demand & supply balance for LNG carriers..........................72
Figure 121: Key figures and valuations - LPG/LNG................................72
Figure 122: CCFI Index values...........................................................73
Figure 123: Y.o.Y. change in outbound containers - Long Beach..............73
Figure 124: US homes sales and retail sales........................................74
Figure 125: US unemployment rate and non-farm payroll......................74
Figure 126: US personal savings vs. charter rates.................................75
Figure 127: Long Beach inbound container volumes..............................75
Figure 128: Westbound TEUs shipped on Asia – Europe.........................76
Figure 129: World GDP growth...........................................................76

Figure 130: EMU household consumption growth and retail sales............76
Figure 131: EMU total unemployment and consumer confidence.............77
Figure 132: Development in industrial production.................................77
Figure 133: Container fleet statistics...................................................78
Figure 134: Container companies’ trade lane exposure..........................78
Figure 135: Idle fleet as of the 4th of January, 2010..............................79
Figure 136: Freight rate by trade lanes, charts.....................................79
Figure 137: Previous freight rate assumptions......................................79
Figure 138: New freight rate assumptions...........................................79
Figure 139: Demand and supply balance for container shipping..............80
Figure 140: ROE and P/B..................................................................80
Figure 141: Key figures and valuations - Container...............................81
Figure 142: Average spot earnings for 270'cbft reefer...........................82
Figure 143: Average spot earnings for 450'cbft reefer...........................82
Figure 144: Reefer fleet statistics.......................................................83
Figure 145: Reefer fleet age profile.....................................................84
Figure 146: Reefer spot rates............................................................84
Figure 147: Historic reefer spot rates and estimates..............................85
Figure 148: Key figures and valuations - Reefer...................................85
Appendices
Appendix 1: Shipping Rate assumptions 2010-2012..............................86
Appendix 2: Shipping rate assumptions 2010 quarterly.........................86
Appendix 3: Timecharter rates, shipping.............................................87
Appendix 4: Non-OPEC crude supply 2009/2010...................................87
Appendix 5: Main contributors to Non-OPEC crude supply......................88
Appendix 6: OPEC production quotas and earlier compliance..................88
Appendix 7: VLCC delivery schedule...................................................88
Appendix 8: Suezmax delivery schedule..............................................89
Appendix 9: Iron ore projects 2009-2011............................................89
Appendix 10: Iron ore price settlements..............................................89
Appendix 11: Capesize rates vs. iron ore contract prices........................90
Appendix 12: Shipyard capacity 2009-2014.........................................90
Appendix 13: Value chain, chemical shipping.......................................91
Appendix 14: Value chain, product tankers..........................................91
Appendix 15: Value chain, product tankers..........................................92
Appendix 16: Intra sector effects between chemical, LPG and PCC shipping.....................................................................................................92
Appendix 17: Earnings revisions.........................................................93
Appendix 18: Dividend yield..............................................................93
Appendix 19: Adjusted shipping multiples............................................94