Fearnleys Weekly - Tankers

Chartering - Crude

A rather tough period for the VLCC-owners. Despite increased activity for all the major routes, the rates have come off rather sharply and earnings dipped well below USD 10k/day for MEG/East voyages. Tonnage has simply been in abundance, and continued high volumes for quite some time will be required to balance the tonnage list. Rates at mid-week may have found a kind of bottom, but any major increases from present levels will be a long and hard upward struggle. Finally, the Suezmaxes have found a little improvement, the past week has been more fluid in terms of cargoes entering the market shifting some of the backlog of tonnage. The tide started to turn last week in Wafr when owners began to resist voyages with higher port costs refusing the last done fixed levels insisting on a premium, thus allowing earnings to return to positive territory. The momentum has built from there with the Med and Bsea both having increased activity and a CPC/Ukcm replacement deal has been concluded at ws80. The end month window in Wafr is likely to see a limited upward trend, however charterers are likely to sit back on early March dates in order to put a cap on further market potential upside. In the Nsea and Baltic the Aframax market has been hovering around bottom levels with earnings closer to zero for most owners. Oil-company relets have lifted a big percentage of the cargo volumes and a such kept other owners at a distance. There is still a lot of available tonnage to be mopped away before we will see any improvement. In the Med and Bsea the market remained steady above ws100 the last week. Going into this week the tonnage list was looking longer, and with Petrogal quoting the market, rates dropped significally. On the back of this we have seen below ws100 done, both from Bsea and for x-Med. For the rest of the week we expect the market to stabilize in the mid 90’s.

Chartering - Product

EAST OF SUEZ After managing to push rate levels out of the doldrums last week, owners continued the surge, setting their sight on triple digit numbers for the LR1s and LR2s trading ex MEG. Coming back to work on Monday the charterers, having had the weekend to re-think their strategy, managed to slow things down a few notches. Rates now appears to be stabilizing at current levels and owners will for sure hope that their efforts over the past couple of weeks have raised the floor for the weeks to come. For the MRs and Handies trading East of Suez, the mantra since we last spoke still is “steady as she goes” with little movement in rate levels from last week’s update. WEST OF SUEZ Rates have been holding steady for the smaller sizes in the west with nothing out of the ordinary to report. The Naphtha arb to the east appears to be shut for now with rates sliding for the Med/Feast route on LR1s on the back of what can best be described as a hypothetical exercise, which at the moment lacks any actual fixture activity and is for sure in for a test of rate levels in the time to come.

Activity level

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

Rates

DIRTY (Spot WS) This week Last week Low 2018 High 2018
MEG / West VLCC 19.00 18.50 18.50 23.50
MEG / Japan VLCC 38.50 41.00 38.50 50.00
MEG / Singapore VLCC 39.00 42.50 39.00 51.00
WAF / FEAST 260,000 42.50 44.50 42.50 48.50
WAF / USAC 130,000 55.00 50.00 50.00 62.50
Sidi Kerir / W Me 135,000 67.50 57.50 57.50 67.50
N. Afr / Euromed 80,000 95.00 102.50 82.50 110.00
UK / Cont 80,000 90.00 90.00 90.00 107.50
Caribs / USG 70,000 85.00 90.00 85.00 132.50
CLEAN (Spot WS)
MEG / Japan 75,000 92.50 90.00 80.00 92.50
MEG / Japan 55,000 100.00 95.00 90.00 100.00
MEG / Japan 30,000 117.50 115.00 110.00 132.50
Singapore / Japan 30,000 132.50 132.50 130.00 145.00
Baltic T/A 60,000 120.00 120.00 100.00 145.00
UKC-Med / States 37,000 145.00 155.00 140.00 155.00
USG / UKC-Med 38,000 80.00 80.00 80.00 135.00
1 YEAR T/C (usd/day) (theoretical)
VLCC (modern) 27,000.00 27,000.00 27,000.00 27,500.00
Suezmax (modern) 17,000.00 17,000.00 16,750.00 17,000.00
Aframax (modern) 14,750.00 14,750.00 14,750.00 15,000.00
LR2 105,000 15,000.00 15,000.00 15,000.00 15,000.00
LR1 80,000 13,750.00 13,750.00 13,750.00 13,750.00
MR 47,000 14,000.00 14,000.00 14,000.00 14,000.00
VLCCs fixed all areas last week: 56 previous week: 46
VLCCs avail. in MEG next 30 days: 147 last week: 135

Sales and purchases

Vessel Size Built Buyer Price Comm.
Arctic Bridge 50 921 2005 Norwegian 12,90 Incl. Finance
Tapatio 46 764 2003 undisclosed 10,00 Inc. 5yrs BB with purchase options
Yellow Ray 19 937 2003 Waruna 10,70