Tanker report Oct 27By james tweed • Oct 27th, 2011 • Category: Tankers
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Thank you for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for October 27th. This report will look at the VLCC, Suezmax, Aframax and clean products markets and if you’re looking for help understanding anything said in this report, please head to CoracleOnline.com and sign up for the Tanker Chartering course. If you use promo code PODCAST, you can save yourself 10%!
We start this report with the VLCC sector and this week there have been positive signs of life in the AG VLCC market as volumes have increased. The last two decades of October have produced just short of 90 cargoes, and 43 cargoes so far for the first decade of November, with a few more to come. It is this volume which is thinning down the tonnage list and getting owners excited, which makes a nice change from reports of charterers being worried about owners’ bunker credit. The 30 day availability index shows 70 double hulls and 1 single hull vessel which is exactly the same as last week. So far, the month of October has produced 113 cargoes, and 53 for November. With the freight rate for 280 AG/US Gulf up 2 and half points to world scale 35and with bunkers down $7 to $660, owners’ earnings are minus $7,900/day, up from minus $10,000 a day last week. This compares with 270 AG/S Korea at 55, up 5 from last week and making owners’ $14,000 a day, up from $8,700 a day last week.
Looking at the Suezmaxes and it was a very disappointing end to last week, with the cargoes that were present in the market managing to fix at lower levels than previously seen. Owners did manage to fight a little bit, so rate drops were slower than expected. With falling rates, charterers backed away from introducing fresh cargoes into the market, which only made owners even more nervous about where the rates were going. Moving into this week, the levels of activity increased again as charterers looked to complete the first decade in November and started moving into the 10-15 window but charterers continued to push rates further south, all the way down to 72.5 from where there was a small bounce. If there was one consistency in this volatile Suezmax market, it was the length of delays going through the Turkish straits. These remained at 5-6 days northbound and 3-4 southbound throughout the week and after rates of 150 being put on subs from the Black Sea, charterers backed off to try and take some of the heat out of the market. This had the desired effect and rates actually dropped to to 127.5. With the first decade of November covered from the Black Sea cross-Med fixed at 100 and then charterers backed off completely in the knowledge that the next Black Sea fixture should be somewhere around the same levels. Historically this year, we have seen rates drop to 62.5, but with delays as they are, it does not look likely that there will be much more down side to this current market. Charterers should come in and take advantage of the relatively low rates. Meanwhile, the constant prospect of weather delays in the Turkish straits threatens to fire the market up again. Novorossiysk was closed for three days this week, which has thrown the program into chaos, adding to the uncertainty.
Now the Aframaxes and the North Sea/Baltic market experienced a correction in rates over the last few days as there was more tonnage available and charterers fixing way ahead again. Anyone left behind will once more be left in trouble just like last week, only this time without the Med market attracting the North Sea ballasters. Primorsk is now fixing in the mid 80’s, and the sentiment is downwards. The Mediterranean maintained its decline to end the week below 100 for cross-Med.
We now look at the clean markets and East of Suez it has been a very slow week for the LR2s. The only activity out of the AG has been Korean and Japanese contract naphtha liftings. Unsurprisingly, these have been snapped up by far-eastern tonnage. The LR1s remain the preferred unit for the jet cargoes moving west and as such there is pressure building on the fully coated, LR2 units. To compound the situation the gasoil arbitrage Far East West is now shut and has taken with it the 4 or 5 potential cargoes from the first half November. The tonnage list basis South Korea was looking pretty tight at the start of the week but this should now bulk out as we go into November, especially as ballasting into the AG does not look appealing at the moment. Rates are going nowhere fast and the market needs a kick start. There has been a small amount of activity this week for the LR1s. A couple of jet cargoes have been fixed West around the $1.8 million level. In the West and on the Continent it has certainly been a more interesting week for TC2 than has been seen for a while, with steady fixing of vessels from Monday through to Thursday. One of the driving factors has been tonne mile enquiry into Brazil for all grades. At least 8 cargoes have been fixed on the Brazil/Uruguay/Buenos Aires route, with more uncovered out to the 10th of November. This in turn has turned States tonnage short, driving a strengthening on the back-haul market and this has again, in turn, further firmed the North West Europe market. The BITR assessment on Wednesday closed up 28 points on the back of an anticipated surge, which was only realised on the physical market 24 hours later, with Repsol fixing 37 at 180 for North Spain/Trans-Atlantic off 7-9 dates. The outlook is firm however, some charterers have sized down their cargoes, which will likely halt any runaway increase in TC2.
Thanks for listening