As one listed tanker owner looks set to go to the wall, we review the markets. Oct 26By james tweed • Oct 26th, 2012 • Category: Tankers
Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Oct 26th 2012. This report looks at the VLCC, Suezmax, Aframax and clean products markets.
As ever we start this podcast with the VLCC sector and this week the shipping press has been alive with rumours of the latest casualty of the depressed freight markets, OSG. Perhaps the distress of the Tankers International Pool partner proves just how tight money is right now. Even those who built up huge deposits of cash during the strongest period of the market are now creaking under four years of depressed freight rates.
The VLCC market this week has been a strange mix of steady volumes of fixing but no progress on rates. Owners have been unable to find any pressure points to exert stress on charterers. Even those requiring multiple discharge options have been able to slip the noose as owners prove willing to be both competitive and willing to offer all options at the same time. There has been no lacking in volume either; steady fixing has progressed all week and it is the usual story of over-tonnage dispersed over multiple owners, giving charterers the opportunity to trade rates down.
There were almost no W Africa/West cargoes reported to have been fixed, but W Africa/East has been steady. Early in the week, the shortened tonnage list meant that W Africa/East had risen to 260 at 41.5, but as dates have moved towards the end of the month this has softened to 39.5 once again. The number of double hull VLCCs arriving in Fujairah over the next 30 days is 50, of which 7 are over 15 years old, compared to last week’s total of 54. October produced a total of 111 cargoes. The freight rate for 280 AG/USG is 23, the same as last week and with bunker prices at $626/tonne, down $15, owners’ earnings are minus $15,500/day. This compares with 270 at 35.5 for AG/East, also the same as last week, and returning owners’ $1,000/day.
Looking to the Suezmaxes and a particularly busy spate of fixing out of West Africa this week was capitalised on by owners. The plentiful supply of
cargoes were once again headed to various discharge areas, and rates to several of these represented any slight improvement on last week’s. Fixtures to the UKCont-Med – which were last week on the up, from 57.5 to 60 – continued in this vein and stabilised at around 62.5… Although it peaked at 67.5, W Africa/Australia returned to 65 by the end of the week, but eastbound voyages to China were going for 70, a 3 point increase; and Peru rates also rose a point. While a few cargoes remain in the market, it is likely they will be gobbled up by a bloated position list with little impact on rates. Whilst a 57.5 Black Sea/UKC-Med was achieved this week, the seemingly market-wide decision by charterers to hold off on fixing last week only served to push rates up. Presumably this was a bid to lengthen position lists, but the 3 day straits delays nullified the effect and in the end, several cargoes populated the market simultaneously. Ultimately, rates rose to 140 at 62.5. In the Med, the end of last week finished relatively strongly with 67.5 fixing for a short cross-Med cargo. This week, owners tried to keep the pressure up with a cross Med replacement fixing at 65. Moving into winter, the weather has certainly started to have an impact with delays at some Med ports and of course an increase in delays in the Turkish Straits. With the large amount of tonnage stuck in Trieste, it becomes much more difficult to find a ship with a “safe” itinerary. At the moment, this has not really transferred to an increase in rates, but the sentiment is building amongst owners.
Now the Aframaxes and this week in the Mediterranean and Black Sea, we have seen some movement on the rates. This is largely due to a charterer having to find replacements twice at higher rates for the same cargo, then choosing to use their own ship. This avoidable disruption in the market excited owners, and helped create the positive sentiment needed to pick rates up from their rock-bottom levels. This momentum was also driven by others looking for replacements as ships were running late due to delays in ports, Trieste in particular, and Black Sea strait delays steadily increasing. This consequently shortened the list of available tonnage. Unfortunately for the North Sea and Baltic Aframax market, it has been more of the same this week, with rates unchanged and activity slightly down from last week. This is mainly due to Primorsk and Ust-Luga stems being covered in advance last week. Tonnage still remains ever present in the UKCont, and it is difficult to envisage rates moving upwards in this instance. TD17 remains 100 at 57.5, which on a round trip with no waiting time is earning approximately $2,000/day for owners. Cross-North Sea remains stagnant and rates at 80 at 85.
Thanks for listening