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For the latest developments in the Tanker markets, listen in to our weekly tanker report. Mar 2

By • Mar 2nd, 2012 • Category: Tankers

The Coracle tanker market podcast for March 2, 2012 in association with Braemar-Seascope

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Thank you for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for March 2nd 2012. This report will look at the VLCC, Suezmax, Aframax and clean products markets.

The AG VLCC market has been steady. The volume of ships fixed over the last few weeks has meant that the tonnage list has been depleted enough to allow rates to remain stable even though there has not been a large volume of cargoes. Since the step down in rates last week, owners have fought valiantly to keep rates at these levels in the face of historically high bunker prices. West Africa had a quiet start to the week, but very quickly the Chinese charterers got thirsty and ships suddenly started going on subs. West Africa/East softened a few points with some very smart chartering, before owners realised the reality of the number of cargoes needing to be fixed. It remains to be seen how many ships get their subjects, but for the moment it seems we have reached the end of March laycans. The 30 day availability shows 61 VLCCs, of which 8 are over 15 years old, compared to a total of 54 last week. So
far for the month of March, we have had 83 fixtures reported with about 40 remaining, against a tonnage list of about 55 VLCCs able to make that cancelling. The freight rate for 280 AG/US Gulf is 33, up a point from last week and with bunkers down $10 to $738/tonne, owners’ earnings are minus $6,000/day. This compares with 270 AG/S Korea at 52, the same as last week and returning owners $17,000/day.

Looking at the Suezmax sector and there was a bit of fight from the owners at the end of last week and they managed to hold rates at 76.25 for US Gulf discharge. The situation changed this week, with charterers pushing hard to drive rates down. As the quiet period extended over several days, a few owners got a little bit twitchy and the resistance waned. Consequently, we saw rates drop to 72.5 for US Gulf discharge and then down to 70. The bunker price remains high but the Worldscale rates are close to the lowest levels we have seen from West Africa in 2012: this might suggest that rates are unsustainable, but we still see an imbalance in the tonnage list in the charterers’ favour. The Black Sea program pushed out well into the middle decade this week as charterers looked to take advantage of the malaise in the market. The Turkish straits delays remained at 2 days northbound and 1 to 2 days southbound. This hasn’t helped owners’ earnings. Each fresh Med or Black Sea cargo that came out proved popular and charterers managed to push rates down further.

It has been much of the same this week for aframaxes in the North Sea and Baltic. The market’s conference rates have been repeated as they have been for some time now. The North Sea has seen steady demand but the market remains over-tonnaged with a number of prompt ships. TD7 remains flat at 80 at 85, and we don’t anticipate this to change in the foreseeable future. In the Baltic, the majority of Primorsk stems have been covered up until the 14th, all at 100 at 77.5. It’s difficult to imagine rates firming, especially when ice has failed to really get going and have an impact on the market, and time is only running out. Unless Owners take a stand and demand more for their ice class vessels, it’s fairly certain this year’s ice market for aframaxes will remain non-existent. In the Med and Black Sea, fixing rates fell further as expected, moving from February stems to March. Sentiment was already on the slide and with limited enquiry, it was just a natural progression to the bottom of the market. Fundamentally tonnage still outweighs enquiry, and there is very little suggestion that
the market should firm.

Turning to the clean markets and MRs in the AG have flirted with an improvement this week. The prompt position has had a bit of a clear out of surplus ships, which has in turn improved the outlook of the market going into next week. TC12 saw a jump in rates with 115 going on subs and whipping owners into a bullish frenzy. In reality, the market doesn’t look that strong, however, and there has been little long haul cargo to back up these numbers. This suggests that a repeat of these levels may be harder to achieve than was first anticipated. Charterers seem happy to sit back and see how things pan out. The LR1s have languished a bit this week. A number of ships failed subjects and rates slipped back below the 100 mark for TC5. The LR2s ticked along this week with the gasoil arbitrage remaining the talking point. While the questions have been plentiful, the number of charterers pulling the trigger have been limited although some traders are making it work, targeting the newbuild aframaxes and suezmaxes for the cheapest numbers. The jet arbitrage is also open and ships are being picked off for mid to end March dates for AG and S Korea to the UK Cont. In the West and on the Continent the promise shown last week has been snuffed out as the focus shifted to the LR’s. Although we have seen far longer tonnage lists, the lack of activity seen for the first 3 days of this week made owners anxious and rates fell. Looking forward to next week and now that the LR tonnage has been pretty much cleaned out for the next 15 days or so, there is some hope that this will shift attention back to MRs and that there
might be an opportunity to arrest rates before further losses are suffered.