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For the latest news on the tanker shipping markets, listen in! Jan 11

By • Jan 11th, 2013 • Category: Tankers

The Coracle tanker market podcast for Jan 11, 2013 in association with Braemar-Seascope

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Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Jan 11th 2013. This report looks at the VLCC, Suezmax, Aframax and clean products markets.

The AG VLCC market has been a balanced affair this week as owners have managed to resist charterers’ pressure to reduce freight rates. There has not been a significant decrease or increase in the available tonnage, hence we find ourselves in a steady situation – even when a Korean charterer received in excess of 10 offers for an AG/Korea cargo loading in the last decade of January. The freight rates are still being traded on 2012 Worldscale as no charterer has braved the new scale, lest they be caught out. The AG/East market is steady at 270 at 46.
Charterers looking to try to fix AG/West have been looking this week for the final decade of the month. KPC arranged their customary monthly shipment with Tankers International and invited a Lykiardopulo vessel to the party, securing her at 280 at 27 via the Cape. For other western destined cargoes, charterers have been shipping via the Suez Canal and managing to get as low 25.5. The world’s largest charterer of vessels in deadweight terms, Unipec, have been relatively quiet this week from the West Africa area, only fixing two or three VLCCs at 260 at 46.5
The 30 day availability index shows 62 VLCCs arriving at Fujairah, of which nine are over 15 years old, compared to 55 last week. So far we have seen 100 fixtures for January, which means we probably have another 10 maximum to go since we expect a shorter month and quite a few programmed vessels have disappeared from the list. There are 15-20 VLCCs which can still make end-January laycans, so there is no pressure on charterers for the moment.
The bunker price is $627/tonne, up $16 from last week so with the freight rate for 280 AG/USG at 27, down 2 owners’ earnings for the round trip going via the Cape Laden and Suez in Ballast, minus $8,000/day. This compares with 270 at 46 going East and returning owners nearly $19,000 a day.

Looking at the Suezmax sector and with the transition from 2012 to 2013 Worldscale still a work in progress, there was some inconsistency in the West African rates this week. 67.5 for the US Gulf was foreboding, but when 72.5 to UKC-Med and 75 East was placed on subs owners might have thought they had dodged a bullet. Unfortunately this was not the case. 2013 rates came into play and depressed the market, with the aforementioned fixture failing before the week was out and rates falling thereafter.
The Mediterranean was quiet for most of the week, with only a couple of players on the chartering front generating activity. On 2013 levels, fixing kicked off at 70. In the North Sea life was equally quiet.

Aframax owners and charterers alike have fully made the transition from 2012 Worldscale rates to 2013 this week and this has made it easier to bring transparency to the market and settle any ambiguity. Consequently, it has been evident that the Med and Black Sea markets have continued to come off gradually from the highs of the holiday season. Tonnage lists have been healthy, any delays have been constant, and there has been no significant bad weather. The Baltic and UK Cont Aframax market, although reasonably active, has a very even spread of both ice class and non-ice class tonnage. Charterers are finding for every cargo they offer to the market place plentiful offers at close to or as per last fixing levels. There is no real pressure from external factors such as bad weather currently, and as result, charterers have managed to push freight rates down slightly from where we began at the beginning of the week.

Turning to the clean markets and it has been a strangely quiet week on the LR1s and the LR2s. There has been little of note to confirm the widely held belief that rates for the long haul voyages have fallen for the LR1s, although the LR2s have seen a couple of ships on subs at $2.5m to the UK Cont, which will add pressure to the LR1 market. The new wave of new building deliveries is slowly getting taken up to move gasoil and ULSD to the West, which is again going to start eating into the LR2 market’s business. However, a great deal of uncertainty surrounds many of the ships pencilled in for delivery in Q1 so far.

In the West and the MR market has continued to move strongly forward as US buyers have been looking for January deliveries of gasoline, and its components. Owners are seeing returns of over $20,000/day on a round trip basis for TC2. Including the allowance for the transition from Worldscale 2012 to 2013, the market has moved up 30 points in a steady rise. The market seemed to have topped out the end of the week and higher levels seem unlikely without sustained enquiry .

Thanks for listening