Fearnleys Weekly - Tankers

Chartering - Crude

The VLCC market remained flat during the last week for modern tonnage as charterers focused more on older units, ex dd, no sire etc willing to accept a tempting rebate about some 12-15 ws-points for east voyages. The rebate closed in as the week progressed and increasing resistance from owners were seen. Looking ahead, owners’ sentiment remains strong as the remaining 3rd decade cargoes are being worked. Delays still evident in the Far East and adds further pressure. The Suezmax market has been under pressure over the past week, activity in West Africa has slowed to a trickle and naturally the tonnage list has swollen allowing charterers to chip away at levels from the early ws100’s down to low ws80’s. The Bsea and Med weather delays have reduced to minimal and again cargo activity has been scarce allowing TD6 to fall sharply down to ws90. Current market conditions buck the normal 4th quarter more healthy market trend and owners are running out of time with December dates rapidly approaching. It is going to take a large volume of cargoes lot to soak up the current tonnage back log. However, a higher oil price is pushing up the bunker prices which in turn is eroding earnings, this could be the brake to stop further rate slippage ahead. Aframaxes trading in the Nsea and Baltic experienced a continued decrease in rates this week. Less cargo activity coupled with an oversupply of available tonnage gave charterers the upper hand and an opportunity to push down the rates. Going forward we see an even further downside before we will see it firm again. Last week the owners in the Med and Bsea were holding for high numbers. But as the fundamentals of the market was pointing towards a softer market, the only thing keeping rates at such high levels were owners’ persistence. By the start of this week, owners realized the list of available tonnage was too long to play hard to get, and caved in one at the time. The market has now dropped 40 points and we could see below ws100 by the end of this week.

Chartering - Product

EAST OF SUEZ After last week’s turn of the sentiment in the in the Middle East Gulf one could have hoped for some more speed in the recovery. Rates for both LR1s and LR2s are almost unchanged from last week at ws125 for both sizes for Far East destinations. The fixing rate for Continent discharge is also more or less the same as last week at lumpsum USD 1.9 mill for LR2s and USD 1.325 mill for the LR1s. Same story with the MRs in the region, and the standard voyage from West Coast India to Japan is still at ws175 mark. In the Far East, rate have also traded sideways last week with the standard MR voyage from Singapore to Japan Still trading at ws177.5 level whilst the short haul voyage from South Korea to Japan still at lumpsum USD 345,000. WEST OF SUEZ In the Atlantic, rates have improved slightly but we are still at low levels. A straight MR voyage from Continent to States is today at same levels as last week, ws105. But fortunately, the back-haul rate from US Gulf has gained ws25 points this week and is today at ws115 level. This means that owners able to take advantage of this increase and fix a triangulation cargo have been able to increase daily earnings from about USD 6000 to USD 8000 today. LR1s trading in the Atlantic have also been able to improve rates and rate is up about ws10 points to ws110 level for West Africa discharge. Even the LR2s fixing from the Mediterranean to Japan have been able to secure slightly higher rates and is today fixing around lumpsum USD 1.750 mill. For the Handies trading on the Continent and in the Mediterranean rates are more or less unchanged from last week at around ws130 level in both areas.

Activity level

VLCC Suezmax Aframax P.E. of Suez P.W. of Suez
Firmer Weak Mixed Stable Stable

Rates

DIRTY (Spot WS) This week Last week Low 2017 High 2017
MEG / West VLCC 28.00 28.00 20.00 60.00
MEG / Japan VLCC 70.00 69.00 39.00 96.50
MEG / Singapore VLCC 72.00 70.00 40.00 96.00
WAF / FEAST 260,000 71.00 71.50 46.00 97.50
WAF / USAC 130,000 80.00 97.50 52.50 117.50
Sidi Kerir / W Me 135,000 87.50 97.50 62.50 117.50
N. Afr / Euromed 80,000 102.50 125.00 70.00 190.00
UK / Cont 80,000 85.00 105.00 85.00 125.00
Caribs / USG 70,000 100.00 100.00 82.50 215.00
CLEAN (Spot WS)
MEG / Japan 75,000 125.00 125.00 80.00 155.00
MEG / Japan 55,000 125.00 120.00 100.00 150.00
MEG / Japan 30,000 172.50 172.50 120.00 175.00
Singapore / Japan 30,000 177.50 175.00 130.00 215.00
Baltic T/A 60,000 110.00 100.00 85.00 155.00
UKC-Med / States 37,000 105.00 105.00 97.50 210.00
USG / UKC-Med 38,000 115.00 90.00 70.00 150.00
1 YEAR T/C (usd/day) (theoretical)
VLCC (modern) 28,000.00 28,000.00 26,500.00 30,000.00
Suezmax (modern) 17,750.00 18,000.00 17,000.00 22,800.00
Aframax (modern) 15,500.00 15,500.00 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 13,500.00 13,500.00 12,500.00 13,750.00
VLCCs fixed all areas last week: 50 previous week: 55
VLCCs avail. in MEG next 30 days: 124 last week: 109

Sales and purchases

Vessel Size Built Buyer Price Comm.
Besiktas Halland 7 701 2208 Kiltank Shipping 9,00
Sara Theresa 2 955 2003 Undisclosed 4,50