Tanker report March 18By james tweed • Mar 19th, 2012 • Category: Tankers
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Thank you for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for March 18th 2012. This report will look at the VLCC, Suezmax, Aframax and clean products markets.
We start with the VLCC sector and there was some good progress made this week from an owners’ perspective as they have co-operatively dug their heels in to force rates up. A lot of the April stems are limited to western ships, now that owners have pooled-up, and Chinese ships are on hold awaiting their contract partners’ final stem confirmations. A spike in the market is expected to hold on up until mid-month, when more ships are starting to show up on the position lists. Notorious market breakers are currently trying to alter this sudden change of sentiment, but reports of market level counters suggest they are also realising the spike is to be taken seriously, especially after a competing company paid up 65 AG/S Korea for a newbuilding. With that in mind it suggests the AG/East market for a modern VLCC is closer to 67.5…. This is a jump of about 12 and half points from last week. In West Africa the market has followed suit with Chinese and Taiwanese charterers overlapping each other with cargoes and from one to the other a jump of 13 points was registered. The trade has since slowed down as charterers are now very cautious of how quickly they move forward, trying to avoid getting burnt. The number of VLCCs arriving at Fujairah over the next 30 days is 50 double hulls (of which 6 are over 15 years) compared to 55 last week. So far for the month of April, we have a total of 22 fixtures. This is not taking into account those Chinese vessels who are still awaiting their contract partners’ stems to be confirmed, only those which have been confirmed. We can expect another 20-25 cargoes for the first decade of April which will set the owners’ month off to a very positive start. The freight rate for 280 AG/US Gulf is 37, up 3 points from last week. With bunkers down a couple of dollars to $741 a tonne, owners returns are $1,500 a day. This compares with 270 AG/S Korea at 67.5, up 12.5 points from last week and making owners’ nearly $45,000 a day.
It was a very quiet finish to last week in the West African suezmax market. As it turned out there was still some under cover fixing taking place which was quietly putting pressure on the list. The market had settled at 77.5 for US Gulf runs, but this was looking increasingly difficult to repeat as the dates moved forward. While it was widely expected that all the March cargoes were covered, there were a few cargoes that appeared in the early part of this week. With the list very tight off early April dates, the sentiment and confidence of owners increased sufficiently to push rates. Some (but not all) of the charterers sat up and took notice of this new confidence and decided that a bird in the hand was worth two in the bush. The first big rate we saw was 97.5 for South Africa discharge. This of course helped pull up US Gulf rates and these rose to 82.5 quickly and moved onwards up to 90 by the middle of the week. Cargoes that needed options were attracting the least interest from the owners and paying much higher premiums than usual. The last remaining March cargo fixed at 125 for Spain discharge, which is a peak we have not seen for quite a while. This was not entirely reflective of where the market was off natural dates, but W Africa/US Gulf had risen to 105 off early April dates. In contrast to West Africa, the Black Sea market was quiet. With March finished, charterers were waiting for the April stems to be confirmed and consequently there was no new enquiry. We expect cargoes to come thick and fast once charterers finally get their dates. The Med market was much busier. Med/trans-Atlantic, cross-Med and a number of replacements helped to increase the market sentiment. There were still number of March dates to cover and any cargo in the early part of the last decade of March was attracting offers in the high 90s.
Things have finally started to look up for aframax owners in the West this week. Ice class tonnage tightened significantly mid-week, and with the first crude tender from Ust Luga being awarded on Thursday, charterers rushed to put ships on subs for the barrels. With tonnage tight as it was, owners took the opportunity to name their price and 100 at 125 was put on subs, a 20 point jump, which was soon followed by 140. The Baltic and North Sea markets remain in the balance, with some ships expected to fail subjects. With the majority of Primorsk stems for March now covered, if the market is to move further, owners will have to hope for some fuel oil enquiry. Down in the Mediterranean and Black Sea, it was a frantic week. Bad weather led to delays and ships were running late. This had a series of consequences such as replacement fixing and a tighter tonnage list than upon first look as so many positions were uncertain, with ships delaying at weather ports. Naturally, this lead to a quick spike in rates.
Looking at the clean markets and there was not a lot to get excited about for the Middle Eastern MRs this week as rates hovered around last done levels. LR1s and LR2s provided a similar story with almost nothing to report on at all. In the West and on the Continent a reasonable amount of activity has prevented any real downward movement in the market.