Fearnleys Weekly - Tankers

Chartering - Crude

Some more activity for the VLCCs, but far from sufficient to change the trend with softening rates. The oversupply of tonnage remains which leaves competition among owners fierce for every firm cargo. Wafr/East a slightly different story as owners’ resistance stronger as few prefers to lock in the long voyages at present earnings. Few changes on the horizon in the near term. Very thin activity in most geographical areas has been the order of play during the past week, for third decade dates West Africa has only seen a sprinkling of cargoes to wet appetites, rates have softened slightly to ws65 for TD20 and TD6 has maintained at ws75 as weary owners seem reluctant to let their earnings slip any further than this. Barrels moving out of the north and the Bsea programme has allowed lists to tick over but there is really just too much tonnage around to be absorbed for now. Shipowners returns are hovering around Apex and with a firming oil price we are likely to see the cost of bunkers creeping up which will be factored into calculations and may cause a braking effect to any further erosion of rates in the near term. The outlook for the week ahead is steady as players look to tighten their belts to ride out this challenging market. The North Sea and Baltic markets continued at same levels as last week even though one charterer wholeheartedly tried to take Baltic down by another 2.5 points. We are seeing a lot of ships being delayed in Southwold at the moment which could make things a tad more interesting. As promised last week, this weekly would feel like a déjà vu. Rates are still mid to low ws80’s, but unfortunately for the owners, the activity has not been as good as last weeks. We have barely seen 3 cargoes worked in the market and fewer ships are also being fixed under the radar. Will be interesting to see how long the owners can hold onto the 80’s before they will have to embrace a worldscale number starting with a seven.

Chartering - Product

East of Suez: The firm sentiment in the MEG continued well into this week with LR2s and LR1s fetching ws125 and ws130 for MEG/Japan respectively at the time of writing. The sentiment remains bullish in the short term with charterers reaching out on forward dates to cover their requirements and we could see further improvements in rates for the remainder of this week. MRs had a slow end to last week but the sentiment have turned rather bullish this week on the back of their bigger siblings, although we have yet to see any real materialization in rates - but then again, Rome was not build in one day either… West of Suez: While the East keeps charging on, the western markets have traded sideways since last week’s newsletter. MRs across the board is keeping busy but with ample tonnage availability we do not expect any immediate surge in rates for the days to come. A few couple of lower than last done fixtures have been concluded, but it should be noted that these are due to less favourable last cargos that commands rebates and are not really market related as such. The Naphtha west-east arbitrage seems closed for now and coupled with a tonnage availability which, at best, can be described as scarce the market is indeed slow for now.

Activity level

VLCC Suezmax Aframax P.E. of Suez P.W. of Suez
Stable Stable Mixed Firm Stable

Rates

DIRTY (Spot WS) This week Last week Low 2017 High 2017
MEG / West VLCC 23.00 23.00 23.00 60.00
MEG / Japan VLCC 42.00 49.00 42.00 96.50
MEG / Singapore VLCC 43.00 49.00 43.00 96.00
WAF / FEAST 260,000 50.00 48.00 48.00 97.50
WAF / USAC 130,000 62.50 65.00 52.50 117.50
Sidi Kerir / W Me 135,000 70.00 70.00 62.50 117.50
N. Afr / Euromed 80,000 82.50 87.50 72.50 190.00
UK / Cont 80,000 85.00 85.00 85.00 117.50
Caribs / USG 70,000 90.00 92.50 82.50 215.00
CLEAN (Spot WS)
MEG / Japan 75,000 125.00 120.00 80.00 155.00
MEG / Japan 55,000 132.50 120.00 100.00 150.00
MEG / Japan 30,000 142.50 138.50 120.00 167.50
Singapore / Japan 30,000 150.00 147.50 130.00 180.00
Baltic T/A 60,000 105.00 105.00 100.00 155.00
UKC-Med / States 37,000 117.50 115.00 115.00 210.00
USG / UKC-Med 38,000 72.50 75.00 72.50 150.00
1 YEAR T/C (usd/day) (theoretical)
VLCC (modern) 27,500.00 27,500.00 27,000.00 30,000.00
Suezmax (modern) 17,000.00 17,000.00 17,000.00 22,800.00
Aframax (modern) 15,500.00 15,000.00 15,000.00 18,500.00
LR2 105,000 15,500.00 15,500.00 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: 45 previous week: 38
VLCCs avail. in MEG next 30 days: 129 last week: 137

Sales and purchases

Vessel Size Built Buyer Price Comm.
Jinhai J0282 299 500 2018 Gulf Marine Management (Greek) 73
Jinhai J0283 299 500 2018 Gulf Marine Management (Greek) 73
Phoenix Light 105 600 2009 Great Eastern Shipping 23,25
Spica 46 168 1999 Undisclosed 5,50
Betelgeuse 45 513 1999 Undisclosed 5,50
Admore Sealifter 47 472 2008 Japanese Undisclosed
Admore Sealeder 47 472 2008 Japanese Undisclosed
Mare Atlantic 68 467 2001 Undisclosed 6,50
Mare Pacific 6 68 467 2001 Undisclosed 6,50
Atlantic Falcon 50 000 2017 Torm 32,50
Atlantic Guard 50 000 2017 Torm 32,50
High Discovery 50 000 2014 Undisclosed 28,00
Sichem Dubai 12 900 2007 Vietnamese 9,30
Amuleth 5 459 2016 Polish 13,00