Fearnleys Weekly - Tankers

Chartering - Crude

The VLCC market ended last week on a generally quiet and soft note except Caribs/East. Much to owners delight renewed activity has been recorded ex Meg at the beginning of the week, but rates have so far been stable. Some more resistance from owners and a slight upward bias on rates mid week. Supply is however ample, despite tonnage continue to ballast from east towards the Atlantic. It has been another tough week for Suezmax owners who have seen a gradual erosion of rates as activity has all but dried up in West Africa, TD20 is at w67.5 but there are ominous signs that we will see a further fall if third decade dates don’t start to work promptly. Most of the activity has been concentrated east of Suez with the MEG being the focus of market attention. Both the Med and Bsea have also experienced limited action with TD6 hovering at w80, again cargoes are needed to clear out the building tonnage backlog. The outlook for owners in the short term looks bleak for the week ahead. Aframaxes in the Nsea and Baltic have experienced slightly better rates in the last week with earnings hovering around a modest $11,000 per day. Going forward charterers do expect the market to come off slightly due to a more balanced tonnage list in their favour. But for the time being rates are moving sideways. This week in the Med and Bsea have been like and emotional roller coaster for everyone involved. Rates have fluctuated from w122.5 (ex dd ship) to w107.5. All cross-Med cargoes off similar dates. It has been all about timing and a good portion of luck this week as all owners, charterers and brokers have struggled to call the market. Moving over to next week, the educated shipping force are still disagreeing on the direction, but we believe low 100 to high 90’s is the key. It remains to see if we have read the crystal ball correct.

Chartering - Product

East of Suez Owners’ dug their heels in last week leaving charterers with no choice other than to pay up. LR1s lead the charge as rates rose to ws145 for MEG/East. Inspired by their little sisters, LR2s joined the party and managed to move the market for MEG/East up to ws117.5, a five-point increase since we last spoke. Charterers are just about to re-group from last week’s shock and is now putting pressure on the LR1s, and we expect the rates to decline slightly to be more in line with the current levels that LR2s are trading at. However, if that level will be maintained remains to be seen as the LR2s show no signs of willingness to leave the party just yet with the sentiment going forward still very much firm. MRs too have managed to keep push the market up with rates increasing steadily across the board for all the major routes east of Suez. West of Suez West/East movements on LR1 and LR2 still being a fairly rare bird as it seems that rates is not where they need to be at the moment to make any sense of sending ships east from the Continent and Mediterranean. A couple of fixtures have been concluded with rates sliding further south toward the USD 1.5 mill mark. Like the three little pigs struggling to find a house strong enough to resist the huffs and puffs from the big bad wolf, MRs in the West have struggled to find a new ground floor for Cont/TA rates of which to start fight back. Depending on options needed, rates have varied from between ws100 and ws115 for TA destinations with rates still to settle. Taken the role as the big bad wolf, Handies in the Med and Blsea have blown down every attempt to hold back from the pigs, this time in role of the charterers. Rates have quickly moved up to the ws200 mark, a 60-point jump since last week’s newsletter. On the other side of the pond, there has been a lot of intra-region activity with little back-haul activity to report, and rates keeping steady.

Activity level

VLCC Suezmax Aframax P.E. of Suez P.W. of Suez
Firmer Weakening Mixed Firm Mixed

Rates

DIRTY (Spot WS) This week Last week Low 2017 High 2017
MEG / West VLCC 21.00 20.00 20.00 60.00
MEG / Japan VLCC 43.00 41.00 39.00 96.50
MEG / Singapore VLCC 44.00 40.00 40.00 96.00
WAF / FEAST 260,000 49.00 47.00 46.00 97.50
WAF / USAC 130,000 65.00 72.50 52.50 117.50
Sidi Kerir / W Me 135,000 67.50 77.50 62.50 117.50
N. Afr / Euromed 80,000 110.00 125.00 70.00 190.00
UK / Cont 80,000 110.00 107.50 85.00 117.50
Caribs / USG 70,000 140.00 140.00 82.50 215.00
CLEAN (Spot WS)
MEG / Japan 75,000 117.50 112.50 80.00 155.00
MEG / Japan 55,000 145.00 132.50 100.00 150.00
MEG / Japan 30,000 162.50 165.00 120.00 167.50
Singapore / Japan 30,000 215.00 190.00 130.00 215.00
Baltic T/A 60,000 105.00 105.00 85.00 155.00
UKC-Med / States 37,000 110.00 110.00 105.00 210.00
USG / UKC-Med 38,000 77.50 87.50 72.00 150.00
1 YEAR T/C (usd/day) (theoretical)
VLCC (modern) 26,500.00 26,500.00 26,500.00 30,000.00
Suezmax (modern) 17,000.00 17,000.00 17,000.00 22,800.00
Aframax (modern) 14,000.00 14,000.00 14,000.00 18,500.00
LR2 105,000 15,000.00 15,000.00 15,000.00 16,750.00
LR1 80,000 13,750.00 13,750.00 13,750.00 14,000.00
MR 47,000 13,250.00 13,250.00 12,500.00 13,750.00
VLCCs fixed all areas last week: 47 previous week: 49
VLCCs avail. in MEG next 30 days: 125 last week: 124

Sales and purchases

Vessel Size Built Buyer Price Comm.
Isuzugawa 299 984 2004 Sinokor 25,8
FD Sea Wish 40 083 2002 Nigerian 7,50