Podcast tanker market report Nov 25By james tweed • Nov 27th, 2011 • Category: Tankers
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Thank you for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for November 25th. This report will look at the VLCC, Suezmax, Aframax and clean products markets.
The week started with owners firmly in control of the AG VLCC market, and the sheer volume of fixing the previous week meant that even the most “relationship-minded” owners have tried to increase freight rates. However, when there are large volumes of fixing, this is often followed by quieter periods and it doesn’t take much to unsettle owners’ confidence when the global fleet is about 20% above what is actually required. Hence this week we have seen steady fixing, but with the volume of deals down from the previous week. More experienced owners are slightly unsettled, less experienced owners are worried, and those controlling oil company relets are almost in outright panic. Perhaps chartering departments are forgetting that chartering out a ship at less than last done is not a positive thing. So, after a stable week with freight rates holding at 270 at 67.5 AG/East on Thursday this was broken as 265 at 62 was fixed for AG/China and then the Koreans came in with a fresh cargo and took it over the edge for a 58.5. The AG/West players have been active under the surface and at one stage this week we were assessing this rate at 42.5. However, in light of softer bunker prices this will also slip alongside the eastern rates.
West Africa has again been steady at some strong numbers. W Africa/West has been untested as low suezmax rates have meant that the majority of oil has been taken on suezmax tonnage. W Africa/East has been fixed a number of times at 260 at 60. However, we think the days of these heady heights are numbered and that we will probably be back in the 50’s before long.
The 30 day availability index shows 55 double hull VLCCs and one single hull still keeping vigil at Fujairah, compared to 48 last week. If we can expect another 65 cargoes for the first half of the month, we still have a surplus of tonnage as there are still hidden positions to augment the position list later in the month. With the freight rate for 280 AG/US Gulf at 42.5, the same as last week but bunkers at $671/tonne, down $29/tonne from last week, owners’ earnings are nearly $4,500/day and this compares with 270 AG/S Korea at 60, down 2.5 points on last week and making owners’ earnings a little under $22,000 a day.
Moving to the Suezmaxes and the West African market this week could be summed up as busy, but docile. At the end of last week, we saw the market continue as it had started, with 70 being the conference rate into the US Gulf, with the various differentials taking their lead from there. This week the American charterers decided they didn’t want to have cargoes to be covered over the holiday period and so all piled in to get covered before the holidays start. This led to a very busy Monday, with 8 West Africa fixtures being done. Tuesday yielded a further 7 fixtures and this has led to a reduction in the tonnage list. The first decade looks light on ships from the cheaper end of the market. However, the natural fixing dates are well into the second decade and this is where the list looks a bit plumper. The strong VLCC market in the West looks to be waning along with the eastern market, so the pendulum looks to be heading towards the charterers. Moving into next week, we may see a “post-Thanksgiving rush” which may put some further pressure on the list, but it seems at the moment that there are more than enough good quality units to cover the expected cargoes.
It has been more of the same for aframaxes in the North Sea this week, with a continued lack of demand. The fixtures which have been concluded were at a slight increase compared to rates this time last week. We expect rates to remain flat for the short term – certainly until the ice season kicks in and draws the ice class vessels away from cross-North Sea cargoes. The Baltic has seen a steady flow of activity, with charterers moving to cover first decade Primorsk stems. As tonnage has progressively built up, charterers have succeeded in pushing crude Primorsk/UK Cont rates down.
In the Mediterranean and Black Sea, activity has been fairly limited. The majority of cargoes have been fixed from Libya, which seems to be well and truly back online in terms of exports. There have also been some substantial movements on fuel, both going long haul west and east. However, collectively this has not been enough to trouble charterers’ low fixing rates.
Looking at the clean markets and it has been a quiet week for the LR2s. Rates West were confirmed around $2.15 million, which was around $100,000 off from previous levels. It didn’t take long before owners used the LR1 activity as an excuse to then start pushing their numbers up to $2.3 million plus…, although no one has shown any interest at fixing these levels. The LR1s have been busy busy busy this week. From first thing Monday morning the market was abuzz with cargo flooding into the market for East and West. Several of the owners felt their chance had finally arrived to push numbers up to something that might even make a few dollars rather than just make a small contribution to their bills. However, others had different ideas and whilst levels have crept up a little to 125, no-one has been able to push things much further. If activity continues into the 2nd decade of December, we should see further increases in levels . In the West and on the Continent it has been what could be described as an utterly typical week ahead of Thanksgiving stateside. Most charterers held off fixing until the very last moment, and then there was an air or surprise that others were doing exactly the same thing. Having said that, the fundamental weakness of the MR market meant that even those owners with both an advantageous position and a correctly dimensioned ship were unable to take advantage of charterers’ misreading of the market and therefore rates have remained broadly unmoved over the week.
Thanks for listening