Tanker market report for Jan 4, 2013. Happy New Year all!By james tweed • Jan 4th, 2013 • Category: Tankers
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Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Jan 4th 2013. This report looks at the VLCC, Suezmax, Aframax and clean products markets.
Firstly, Happy New Year to all our listeners. At the time of recording this episode we’re about to reach 7.8 million downloads from ShippingPodcasts.com. We’d like to say thank you. We’d also like to invite you to get in touch and give us your feedback and requests for 2013, so please do email us firstname.lastname@example.org.
We start with the VLCC sector and taking a look at the fleet statistics over 2012, 47 new VLCCs were delivered against a total scrapping of 13 ships, thus an overall fleet growth of 34 ships, representing 6% of the total global fleet of 604 VLCC’s. Some owners managed to delay deliveries into 2013, which has meant that at time of recording, deliveries for 2013 look like a strong 65 vessels. The delaying tactic will probably be popular once again if freight levels remain as low as they were in 2012. Over the past year TD3 averaged at 260 at 47.25 for Ras Tanura/Chiba. We calculated average annual earnings of just below $11,000/day. Increasing operating costs, now up to between $$12,000/day and $15,000/day, it is difficult to visualise where those fixing round trips AG/East have been making a profit. Triangulation has meant that owners have been able to increase this by about 30% towards $20,000/day but this is always running the risk of excessive waiting times.
This week the VLCC market continued to trade on 2012 flat rates but we expect the switch to 2013 will be next week. On average, flat rates will improve by about 13%, thus pushing Worldscale rates down accordingly. The AG market started slowly with a couple of the weaker willed units panicking after the New Year break, but since then quite a few cargoes have hit the market. S-Oil quoted an early cargo off 9-10/January, which excited some of the stragglers and managed to fix 274 at 44.25 to South Korea. Since then more Korean charterers followed their lead and the second decade of January we now see quite a few cargoes working. Naturally this gets owners excited and with the VLCC list looking marginally shorter than usual, we might have some room for the market to improve.
The 30-day availability index shows 55 VLCC’s arriving at Fujairah of which 7 are aged over 15 years. So far we have noted up to 54 fixtures for January, which in theory means we will be short of ships, however many are hidden and often fleets will only market their first vessel.
Moving to the Suezmaxes and a feast of cargoes has been laid out in West Africa. Returning bloated bellies however found a similarly bloated position list, and whilst initial sentiment held rates at 75 for UKCont-Med and similar levels for Brazil early on, these dipped slightly as owners seek to fix before the post-holiday rush calms down. Rates cooled to around 70 for UK Cont-Med by the end of the week and 67.5 for the US Gulf, in part also due to some clever chartering characterised by several charterers backing up initial cargoes with one or more immediately after. Sentiment was thereby subdued, though considering the week was punctuated by New Year’s Day it has been reasonably busy. Owners will hope these levels of activity will continue, and that demand for vessels rises because the thinning of the position list. Currently the list is still plump and there are a healthy number of vessels already in the region, reducing the reliance on expensive ballasters. The majority of the Mediterranean activity has been for east voyages, some to India but mainly to Singapore. Rates started early in the week at $2.5m to East Coast India, although they rose slightly to $2.65m by the end of the week. Rather contrary, the Mediterranean East rates remained stable at $2.8m to Singapore with the usual variations for fuel oil and different load terminals. Some charterers pushed dates out of the Black Sea pre Christmas, meaning that the levels of activity post-Christmas have not quite been as expected.
It has been a rather lacklustre start to the first short fixing week of 2013 for Aframax owners in the West. Considering the short fixing week last week as well, there was a good volume of activity going on under the radar. However, as we moved in to the holiday period the Baltic Aframax market was showing signs of softening and since then after the holidays, a few ships have been left in a spot position which was expected but rates have now fallen to 100 at 90 on the 2013 flat rate. Cross North Sea cargoes are now fixing at 80 at 90, again on the 2013 scale. After charterers covered their positions in advance over the holiday period, it has been a slow start to the year with respects to activity in the Mediterranean and Black Sea. Consequently, the overall sentiment is that rate levels are going to come off further, however as we make the transition from 2012 to 2013 Worldscale rates, this might not be as smooth as normal. Despite this charterers are expecting to pay in the region of 80 at 82.5 for a cross Mediterranean, and 85 for a Black Sea cargo.
Looking at the clean markets and we’ve come back into the market in 2013 with rates seemingly dropping quite sharply after the gains made throughout the last quarter of 2012. LR1 paper dropped drastically to 104 on the new scale for February and is only around 114 for January. On the physical market rates are assessed to be down to around 122.5 for AG/Japan, and although last done to the West is $2.4m, the trend is definitely weak. LR2s did most of their falling prior to Christmas and levels appear to have steadied at around the 105 mark for AG/Japan although a lot of the activity we’ve seen this week has been replacement fixing on prompter dates. Again, it is unlikely current levels can be held under the weight of the incumbent tonnage lists.
Thanks for listening