Another exciting week in the world tanker markets. Report Nov 17By james tweed • Nov 19th, 2012 • Category: Tankers
To learn more about the tanker markets and other aspects of commercial shipping, head to www.coracleonline.com
Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Nov 16th 2012. This report looks at the VLCC, Suezmax, Aframax and clean products markets.
We start this podcast with the VLCC sector and its been another exciting week! The last time we experienced such increases was back in April.. Last week we saw the foundations being laid with rates approaching the 40 level for AG/East. That same momentum kick started this week with no less than 7 cargoes coming into the market on Monday, supplying owners with the ammunition they required to burst through that 40 barrier. As the week progressed, we saw the last of the November laycans covered and charterers quickly realised the combination of a busy first decade of December and a bullish sentiment meant the momentum wasn’t waning any time soon. This forced their hand to come to market early with December laycans to ensure they secured the correctly approved ships on safe itineraries: replacing vessels on a rising market is an expensive business… At the time of recording this podcast, 24 fixtures are reported on subs or fully fixed out of the AG for December laycans and rates have picked up to 270 at 49.5 AG/East. However, the last 3 fixtures have all been covered at the same level so we have to ask, have owners got the patience and the courage for another push to get them through the 50 barrier or will they now be happy to repeat last done?
The increased activity last week in the Atlantic also spilled over into this week. Unipec saw a busy week and a tight tonnage list so entered the market early. By Tuesday, momentum had started to increase and rates started to move, from 42.5 to 48.5. Meantime, it was a quiet week from the Indian charterers due to Diwali celebrations.
The 30 day availability index shows 40 VLCCs arriving at Fujairah, of which 5 are over 15 years old, compared to 46 last week. November totalled 131 fixtures and so far for the month of December there have been a total of 24. Bunker prices are up $12 to $610, so with the freight rate for 280 AG/USG at 32, up 6 and a half point, owners earnings are now minus $3,700 a day whilst 270 AG/East at 49.5, up 12 points, returned owners a much improved $24,500/day.
Looking at the Suezmax sector and following on from last week’s inauspicious forecast, the West African market continued its current form,
sticking closely to 57.5 for UKC-Med voyages. Small upward fluctuations, such as an early 60 for the UKC-Med and subsequently 57.5 for the USG, proved to be ‘flash in the pan’ fixtures in a fairly stagnant market. There was a good amount of fixing in West Africa this week with one owner tucking a large part of their fleet away. However, with charterers fixing quietly the market never picked up any momentum. Although bunker prices fell at the start of the week, they promptly picked up, keeping earnings low and thus artificially supporting the market against further
downward pressure. But with such a healthy tonnage list, there is little doubt as to whether there’ll be a miracle recovery or not and the expectation remains that these levels will perpetuate for some time.
Once again, fixing out of the Black Sea was sparse as we await the majority of early December stems. After the dearth of cargoes last week, rates inevitably dropped to around 140 at 57.5 for UKC-Med. Although it was a ship sitting in the Black Sea already, it was a surprising drop considering the slowly increasing straits delays – now approximately 3-4 days.
It was another week of scraping along the bottom in the Baltic and North Sea Aframax market. The large majority of the crude oil from the Baltic Sea is covered now up until the end of the month. There are still a number of well approved units left on a reasonably prompt position and that would suggest that there is no real sign of improvement, at least in the short term. Some DPP has been working to the states this week, which has given owners with non-ice classed tonnage an opportunity to get out of the area. Theoretically, one could argue this could tighten the Baltic and North Sea position list, but for every non-ice classed vessel that decides to leave the area, there is probably one with the desired ice classification trying to get back north.
In the Med and Black Sea, rates have remained flat at the bottom of the market. Charterers have been consistently paying 80 at 77.5 for Black Sea and Ceyhan loaded cargoes, and 75 for other cross-Med voyages. It was a slow start to the week with little enquiry, but over the last day or so levels of enquiry have seemingly increased as ships have been picked off the tonnage list. Black Sea strait delays have been 3-4 days, but if these increase and fixing continues at this current volume, then some positive sentiment could build, putting pressure on these rate levels.
Looking to the clean markets and in the East the LR2 market finally made good on its threats over last few weeks to really take advantage of a tighter tonnage list that has dominated the market recently. Rates of 120 to Japan were confirmed and a reported high of $3m to the UKC
has been seen, although many feel the reality is slightly lower. At time of recording, owners were trying to push numbers even higher, in the very tight window of 1-10 December, although as tonnage lists lengthen out post 10th, ideas are more in line with the rates that have been fixed this week.
In the West and the continent TC2 MR rates remained flat, if not soft, in the wake of Hurricane Sandy. The front end was loaded with firm itinerary open positions, but a lack of volume due to ultimately bearish data from the US kept rates down at 117.5, if not less. Infrastructure, refinery utilization and flooding damage kept gasoline and heating oil levels at parity in the US. Consequently, the only true active trans-Atlantic charterers were Petrobras, PMI and other non-US focused traders. Of course, the market is watching next week for Thursday 22nd, and also the on-going recovery efforts of terminals and refineries on the US East Coast. As yet, Thanksgiving has not affected the market and is doubtful to do so.
Thanks for listening