Tanker report in a week in which dirty ballast discharges suspected in bird deaths in UK. Feb 1By james tweed • Feb 1st, 2013 • Category: Tankers
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Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for Feb 1st 2013. This report looks at the VLCC, Suezmax, Aframax and clean products markets.
This week we have seen VLCC owners put to test rather than the sword. With about 40 vessels available up to 20th February, the competition has been fierce. At the start of the week, we experienced the usual tactics from charterers, drip feeding cargoes into the market and picking off the most competitive tonnage as rates fell towards the 30 level for eastern destinations. Many tried to break that level but it became quickly apparent that with such reduced earning capacities, owners were not willing to risk the transportation of 2 million barrels at such low returns. What has been apparent over the past two weeks is that the differential between the earning capacities in the East has diminished against those in the West under triangulation. The competition for AG/West voyages via the Cape/Suez has become increasingly popular, and we have seen western rates fall to a new low of 17.25 via the Suez and 18.75 via the cape, with little more adjustment expected.
It was a week of limited activity in the Atlantic. In West Africa, charterers are now in the window for receiving their early March stem dates from suppliers. Volumes in February from West Africa have been surprisingly low as was evidenced by the likes of IOC lifting only two cargoes for the month and minimal activity seen from the giants Unipec. The lowest rate seen in February for W Africa/China was 33, achieved by Unipec, as owners’ sentiment hit rock bottom. Due to the state of the market in the AG, the West African market is being dominated by eastern ballasters at the moment, making the scenario in this region extremely competitive. Volumes for March are expected to pick up to normal levels. However, with charterers having ample choice of tonnage, one can’t see any significant increase in rates for the coming week.
The 30 day availability index this week shows 62 VLCCs arriving at Fujairah, of which six are over 15 years old, compared to 59 last week. With the month covering steadily and more ships entering the market, the outlook looks bleak for owners. 53 cargoes have already been fixed for the month, keeping in mind that February is short. Drip feeding is likely to continue and we cannot expect to see a resurrection of this market. This time last week, 35 cargoes had been covered from the AG, making the weekly addition 18 fresh fixtures – far from enough to make an impact on the rate situation.
Moving to the Suezmaxes and in the early part of this week rates continued to float just above last seen levels, despite an early short West Africa fixture to Sines achieving 57.5. UKC-Med generally rebounded to 52.5, although 50 was still agreed in a couple of instances. Dates are now shifting into the last decade of February, as most of the middle decade is covered. The list still looks relatively healthy, although by no means long. As W Africa/UKC-Med seems to be the base West Africa voyage at the moment, the ships on the Continent should still find comfort in the round voyage. Any significant increase in activity will encourage owners, however without it, charterers should manage to maintain the status quo.
The Black Sea rose a couple of points to 140 at 60, with the delays reaching 5 days and charterers limiting their options to very safe ships. There was a good level of fixing from Novorossiysk, with all bar one of the cargoes for February now fixed. We saw a couple of voyages fix to Ningbo at $4.5m and couple fix cross-Black-Sea at $750,000. There still seems to be little likelihood of a recovery in this market once the ballasters are taken into account, but as always the weather could factor in heavily. The current health of the Aframax market could also have a role to play in propping up the Suezmax market, particularly if rates for cross-Med
exceed 100. For Suezmaxes in the Med it has been a week of fervent fixing, a large amount of which was Eastbound.
For Aframax owners the maintenance period at Primorsk, between 12th and 17th, has halted cargo output and taken a big slice of confidence with it. Ships discharging with short options in Scandinavia haven’t helped and it’s quite interesting to see how quickly
sentiment can change. From a bullish week, owners are currently on their heels trying to take what they can and minimise waiting/cost of carry. 100 at 70 for UKC discharge has been obtained by one charterer for tender barrels that they won loading from Ust-Luga off 15-16 February. That business had 7 independent offers. This very sensitive Baltic market will need to rebuild again after being taken down some 30 points this week. Cross-North Sea activity is minimal and there is some DPP/fuel activity, albeit on prompter dates. The Med market has seen a large cargo base this week and charterers could only do so much in keeping
their activity out of the public domain. As several ship requirements came in on the same or similar date range, competition for ships began and rates climbed accordingly. 80 at 100 has been agreed for cross-Med voyages on more than one occasion. Confidence is up but at the same time, owners must be aware that there is still a rather lengthy position list. With a lot of short voyages being fixed, those ships fixed at decent levels will turn around very quickly indeed.
Looking at the clean markets and in the West the MR market was in a state of ‘lazy limbo’, with a subtle hint of firming as it carried over from last week. The Hess refinery shutdown caused some further nervousness and gentle excitement, but it was bad weather
in the North Atlantic and its slowing effect, by as much as 6 knots, on the laden cargoes heading to USAC that kept the arbitrage open, and charterers were still active off prompt dates for UKC/-trans-Atlantic. This made things very firm.
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