Our client, a significant investment group, required a detailed throughput forecast for a large infrastructure asset (port) out to 2040 under five different market scenarios. These forecasts were utilised in the client’s financial model and also in the financial investment decision.
Given the interrelated themes across many of these commodities, we constructed four distinct demand models that incorporate both macro assumptions and sectoral demand drivers including governmental policy to derive a forecast. Underpinning these models were structural changes that influence the demand outlook (e.g., the rise of electric vehicles and renewable power, carbon and climate policy, the growth profile in SE Asia).
The throughput forecast was based on a combination of supply and demand forecasts. The supply forecast considered the current mines in the basin supported by the port and their likely throughput in the future (based on approvals and resources), along with possible new supply in the basin and its potential throughput, resulting in a supply forecast at the mine level. From a competitive perspective, supply from other major regions was also forecast at the mine level.
The demand forecast covered the many markets supplied by the port’s customers as well as potential new markets. Imports were forecast based on new capacity under construction, competing for domestic supply and overall demand growth. The supply and demand forecasts were then combined to assess the market equilibrium in each scenario, assess the competitive position of the port’s throughput and forecast throughput across the period.
Our forecasts provided a clear assessment of the risks and opportunities for the port over the period. This included potential supply from other jurisdictions taking or losing market share, slow development of projects in the port’s own area reducing its throughput and demand growth driving higher throughput. A full assessment of the connecting infrastructure was also provided, including the identification and timing of potential bottlenecks across the period.