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We’re back! Tanker market review podcast for Aug 3

By • Aug 3rd, 2012 • Category: Tankers

The Coracle tanker market podcast for Aug 3, 2012 in association with Braemar-Seascope

Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Aug 3rd 2012. This report looks at the VLCC, Suezmax, Aframax and clean products markets.

The London Olympic Games started this week with an opening ceremony which celebrated the history of the British Isles and provided a welcome distraction from the diabolically bad VLCC market. Ship owners are trying to make the best of what is available, but the chronic over-tonnage means there is a fight even for the most meagre returns. Some commentators said that a KPC fixture of 275 at 22.5 for AG/West draws parallels with the disqualified badminton players, “not playing to the best of one’s ability”. But, with competing offers at 280 at 23.5, who can blame them? Despite the Chinese charterers fixing ships like they’re winning medals in the pool, owners just can’t break the charterers’ dominance. Charterers, on the other hand, are regularly breaking records, keeping the AG/East market at around 270 at 34 which probably gives negative earnings for China discharge. Market rates will only improve once owners pull
away from the market and refuse to trade at these levels.

West Africa to the East, the long distance event, has seen rates dip below the 260 at 36 level and such a long voyage at below operating costs reflects owners’ outlook for the summer.

The 30 day availability index shows 58 VLCCs arriving at Fujairah, of which 6 are over 15 years old. This compares to last week’s total of 54 VLCCs. August has provided 77 fixtures from the AG so far and owners live in fear that we might have another month like July in which we counted 109 in total.

The freight rate for 280 AG/US Gulf is 23, the same as last week and with bunkers at $637/tonne owners’ earnings are minus $16,000 a day. This compares with 270 AG/S Korea at 34, the same as last week, and making owners’ minus $3,500/day.

Moving to the Suezmax sector and with rates seemingly having bottomed out for two weeks running, we saw rates drop once more as US Gulf voyages went from 60 to 57.5. A bunch of cargoes towards the end of last week exposed the weak position of the crowd of vessels in West Africa. Following this, charterers were wise to avoid over-egging those who had held out to weather the storm. Once again, cargoes were drip-fed into the market and those contenders going for gold were forced to concede defeat in the face of strong competition, with rates dropping to 55 at one stage. It was, generally speaking, a quiet week, but a late quoted cargo seems to have resulted in an upset as cargo requirements shortened its list of able vessels, and 58.5 was fixed. As such, we may see rates recover and the hopes and dreams of owners may be fulfilled with a recovery. To achieve this there will have to be sustained resistance from owners, but the steady flow of cargoes suggests there is reason for optimism.

It’s been an extremely subdued week of fixing in the Black Sea, culminating in rates of 140 at 62.5 for Black Sea/UKC-Med, a 7.5 point drop from last week. The most exciting prospect for owners seemed to be the opportunity to long jump east, with $2.45m fixed Med/EC India. Plenty of vessels are in position to make the East Mediterranean for August dates – a list that is particularly healthy given that it excludes ballasters, offering little respite from harsh competitive conditions.

Now the Aframaxes, and this week kicked off with a flurry of activity in the Baltic market, albeit at low freight rate levels, with Primorsk and Ust-Luga stems getting covered between 100 at 60 and 62.5. As we approach the end of the week, Primorsk stems have been covered up until mid-August. At one point during the week, the tonnage list seemed to tighten but it has since replenished itself.

In the Med and Black Sea activity on the whole has been relatively quiet. Tonnage lists have been building and charterers have had the pick of the ships. If owners weren’t already struggling to break even on the current market rates, then fixing levels would certainly have been pushed down further.

Now a very quick look at the Western clean market and the Continent trans-Atlantic arbitrage has been wide open this week. With a good level of enquiry early in the week, activity was up but reports suggested a major refiner managed to break the 100 level. The outlook remains soft, especially with Odfjell’s tankage problems in Rotterdam affecting naphtha supply.