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So what happened in the tanker markets this week? Listen in… May 4th

By • May 4th, 2012 • Category: Tankers

The Coracle tanker market podcast for May 4, 2012 in association with Braemar-Seascope

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Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for May 4th 2012. This report looks at the VLCC, Suezmax and Aframax markets and please remember, we love to get your feedback, so please leave your thoughts as a comment on

We’ll start with the big tankers, the VLCC’s, where last week concluded with charterers doing their best to clear their desks before the May Day holidays. Hence, there
was a rush of enquiry and owners seized the opportunity to demand some improved rates. Most charterers held rates steady, with only one or two deals reported up to 265 at 65 level for some earlier laycans. Owners offering levels and fixing ideas quickly became too much for charterers who either withdrew or temporised their cargoes. Perhaps if smaller steps had been taken, owners might have been able to progress the market. However, asking for 5 or 10 points more only frightened charterers away from the market, which resulted in a stand-off situation. The elongated holiday worked in the charterers’ favour as cargoes were fixed off-market and when owners returned on Wednesday, their confidence had been undermined. Realistically, the fundamentals of the market were always in charterers’ favour as there is still an oversupply of vessels, but their patience was required. By Wednesday, charterers returned in force. Sensing they had owners on the run, a number of deals were completed, forcing rates just below the 265 at 60 level for AG/East and 280 at 40 for AG/West. It remains to be seen where we go from here as the market is now balanced: more cargoes will put the ball back in the owners’ court, whereas a quiet period will again unnerve owners.
The West African market is mirroring the AG with the fixing rates approaching 65 for end May laycans. For W Africa/China, one ship was put on subs 260 at 65, however this deal failed and 64.5 was fixed. Then a Japanese vessel has displayed a complete crisis of confidence and fixed off 6th June dates at 260 at 57.5, followed by another eastern owner fixing 260 at 55. This reflects just how easy it is to shatter owners’ confidence, and also underlines the security some owners are now gaining by operating as part of a pool arrangement.
The 30 day availability index shows 59 double hull VLCCs arriving at Fujairah, of which six are over 15 years old, compared to 57 last week. So far for the month of May we have had a total of 95 fixtures reported, which should leave about 30-40 left to cover and 46 vessels available for May laycans, hence it could get short of tonnage if we have another 150 fixture month like April. With the freight rate for 280 AG/US Gulf at 40, up 2 points on last week, and with bunkers down $5 to $718/tonne, owners’ earnings for the round trip via Suez are nearly $9,000 a day. This compares with 270 Ag/S Korea at 60, up 2, returning $32,000 a day.

Moving on to the Suezmax sector and there was fairly consistent action in the West Africa market throughout last week. The rates bottomed at 62.5 and this is where they stayed until the end of the week, even though there were good levels of activity. As we moved into this week, the consistent levels of fixing had put a bit of pressure on the list. There were still some cheap ships available but these owners had the confidence to try and push rates up. The market moved in an upward trajectory, albeit at a gentle gradient, gaining around 2 and a half points for every step up. It was quite clear that on a market like this, owners responded more positively to traditional A to B cargoes and anything that was even a little outside these boundaries faced a lot more resistance. For these charterers, there were two schools of thought, either face up to the market and pay a higher than normal premium or sit on your hands and wait. By the end of the week, this led to a few cargoes that had been in the market for most of the week slowly following it up. The fresh cargoes continually came into the market throughout the week and by the middle of the week rates had moved to 72.5 for UK Cont-Med discharge. Although this was not a substantial move overall it demonstrates that owners had made the most of the opportunities that had presented themselves. With 4 or 5 cargoes still in the market before the 25th, it looks like the market should remain steady at these levels until the end of the month.
The Black Sea market followed a similar path to West Africa this week, although it was a touch more volatile. In the Med, there was a significant increase in the amount of Libya cargoes in the market. The majority of them were destined to go east and were fixing around $2.8 to 3m for Singapore. By the end of the week the amount of ships willing east was thinning and the remaining eastern cargo was attracting some fairly hefty numbers.

Baltic Aframax rates threatened to firm this week, but ultimately failed to do so, despite strong demand from Primorsk and the increased volume of stems from Ust Luga kicking in. The majority of stems from Primorsk up until mid-May have now been covered. As ships began to get picked off this list, tonnage started to tighten, which subsequently increased sentiment and owners reacted by becoming more bullish with their ideas. The market currently lies at 77.5. In the Med and Black Sea, aframax enquiry has been very scarce. Tonnage has been quick to build up and so rates have crashed. Sentiment was already rather bearish, but after a market quote was successful in fixing sub 100 for a cross-Med voyage, this only added to the downward pressure on owners. The last reported fixture is 80 at 90 and this could easily worsen if levels of activity stay this low.

Thanks for listening