Fearnleys Weekly - Tankers

Chartering - Crude

The activity for the VLCCs, particularly from MEG, sharply increased over the last few days. True to form the majority done secretively and well off the market. Owners’ resistance definitely up which has stopped the slide in rates and they have managed a slight increase. Tonnage still in abundance and it will take both time and effort to add more. Wafr/East much the same and rates off the lows with last done ws50. Suezmaxes finally found some positivity last week impacted by the uncertain itineraries on many ships due to Hurricane Harvey and a number of vessels being chartered in to replace Aframaxes that were compromised by the storm. Naturally sentiment rallied and rates climbed to ws72.5 for TD20. Charterers reacted by sitting back to dampen enthusiasm creating a quiet end to the week. However as this week has progressed we have observed the market stabilising as Charterers patience has paid off and the tonnage lists have reflected a build-up of new candidates to cover current requirements. The outlook for the week ahead is balanced, however if the Caribs market tightens up with the approaching 2nd Hurricane Irma, the West Africa market will likely experience a secondary rally giving owners the impetus they need to capitalise. Nsea and Baltic are following their neighbouring markets and have started the journey towards a brighter future. Baltic crude cargoes are only covered 10 days ahead, and would expect Charterers to do a bit of shopping prior the weekend. Both markets should move further up on the back of pure sentiment. In the Med and Bsea rates have moved up to a more sustainable level. A tighter tonnage list, higher cargo-activity, and Owners that have been waiting for this scenario for almost two months caused this increase. There were and still are prompt ships around, but Owners held back which resulted in ws100 being done several times. Unfortunately, there are still some prompt ships around and dates are now fixed far forward. Hence, Owners will need to gear up for a fight to keep the rates at three digits.

Chartering - Product

EAST OF SUEZ In the absence of any impulses, it has been very little change in the market in the MEG this week. With low activity charterers have been able to put pressure on the LR2s and owners have had to accept a decline of ws5 points to ws100, and it could drop further. Little bit different for the LR1s where owners have been able to secure slightly higher rates and is today fixing at ws125 level. For both sizes rates for Continent discharge have slipped and is today at lumpsum USD 1.6 mill for LR2s and USD 1.325 mill for LR1s, down USD 125’ and 50’, respectively. No change for the MRs trading from WC India to Japan where the rate has been stable at ws147. In the Far East the MR voyage from Singapore to Japan is still at ws160 level but the short haul voyage from South Korea to Japan is up USD 10’ to USD 280,000. WEST OF SUEZ In the Atlantic, the market is on a slippery slope after the sharp upturn last week due to the damaging tropical storm ‘Harvey’ making landfall in the US Gulf. It seems refining capacity will be online earlier than predicted and less product has to be imported, and also the export from US Gulf is coming online. The straight MR voyage from the Continent to States has dropped from a top at around ws250 to ws150 today, and is still under pressure. The backhaul cargoes from US Gulf is increasing and so is the rate, and this voyage today pays around ws105 level. This triangulation gives owners today a daily earning of about USD 14,000, down from USD 23,000 a few days ago. Also the LR1s have seen rates increase, with more tonnage being used for transatlantic cargoes rates for West Africa discharge did peak around the ws145 mark, but has today slipped to about ws120 level. LR2s loading in the Mediterranean have also been able to increase rates slightly and is today obtaining close to USD 1.6 mill. Handies trading in the Mediterranean have secured a ws15 point increase last week and rate is today at ws135 level. On the Continent the rate has gone from ws130 to a peak at ws220 level, has dropped to ws173 today, and is still under pressure.

Activity level

VLCC Suezmax Aframax P.E. of Suez P.W. of Suez
Firmer Stable Firming Stable Soft

Rates

DIRTY (Spot WS) This week Last week Low 2017 High 2017
MEG / West VLCC 22.00 22.00 22.00 60.00
MEG / Japan VLCC 41.00 39.00 39.00 96.50
MEG / Singapore VLCC 42.50 40.00 40.00 96.00
WAF / FEAST 260,000 50.00 46.00 46.00 97.50
WAF / USAC 130,000 67.50 57.50 52.50 117.50
Sidi Kerir / W Me 135,000 77.50 72.50 62.50 117.50
N. Afr / Euromed 80,000 100.00 75.00 70.00 190.00
UK / Cont 80,000 95.00 85.00 85.00 117.50
Caribs / USG 70,000 165.00 145.00 82.50 215.00
CLEAN (Spot WS)
MEG / Japan 75,000 100.00 105.00 80.00 155.00
MEG / Japan 55,000 125.00 120.00 100.00 150.00
MEG / Japan 30,000 146.00 148.00 120.00 167.50
Singapore / Japan 30,000 160.00 160.00 130.00 180.00
Baltic T/A 60,000 120.00 105.00 85.00 155.00
UKC-Med / States 37,000 150.00 210.00 105.00 210.00
USG / UKC-Med 38,000 105.00 90.00 72.00 150.00
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) 14,000.00 14,000.00 14,000.00 18,500.00
LR2 105,000 15,000.00 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 13,250.00 13,500.00 12,500.00 13,750.00
VLCCs fixed all areas last week: 62 previous week: 32
VLCCs avail. in MEG next 30 days: 125 last week: 138

Sales and purchases

Vessel Size Built Buyer Price Comm.
Nichinori 298 414 2002 Sinokor 21