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The tanker market feels like a bad April fool. Painful. And without humour

By • Apr 5th, 2013 • Category: Tankers

The Coracle tanker market podcast for Apr 5, 2013 in association with Braemar-Seascope

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Thanks for downloading the Tanker Market report podcast from Coracle and Braemar Seascope for April 5th 2013. This report looks at the VLCC, Suezmax, Aframax and clean products markets.

Starting with the VLCC sector and the week started slowly with the Easter bank holiday weekend but by Tuesday lunchtime there were as many as eight charterers reportedly working the market. By the time a Ras Tanura/Onsan cargo was quoted, ten offers were collected and any semblance of a VLCC market was duly dispatched into the long grass. 274 at 30.5 for AG/Korea is one of the lowest fixtures of the year and is the equivalent of 270 at 31.5. As if to prove how easy this feat was, they repeated 270 at 31.5 on a second ship. Since these two fixtures, owners reclaimed some ground with an improvement of 0.3 points. Ermm..

AG/West rates have been steady, fixing 280 at 18 via the cape, and less via the Suez Canal despite an increase in volumes traded in this direction. This is because April has a busier than usual Basrah loading program. Unfortunately, the surplus of available ships means that even large increases in volumes from Basrah have little effect on freight rates. Among the Indian charterers, it was Reliance and IOC who were busy this week. They made good use of the quiet start to the week after a long weekend and
completed their second decade requirements out of the AG.

West Africa was busier than last week, with far eastern charterers showing interest in covering early May loading dates with fixing levels at 260 at 33.75 for West Africa/China. For earlier loading dates the availability list quickly tightens up and fewer ballasters are there to help out, thus rates are higher and 260 at 35 was reportedly fixed for W Africa/East off end April.

The 30 day availability index shows 61 VLCCs arriving at Fujairah, of which 12 are over 15 years old, compared to 56 last week. So far for the month of April we have seen a total of 80 fixtures.

Turning to the Suezmax sector and West Africa continued to disappoint this week. A quiet start at similar levels to last week (62.5 for UKC-Med) gave way to poorer rates through the back end. This was surprising, not least thanks to some fairly prompt cargoes that might have been expected to boost the market. Rates of 57.5 to the USG and 60 for the USAC maintained form, but it was a fixture to South Africa that began to topple sentiment at 65. Tonnage lists remain healthy as we close out the last decade of the April stem list. In the Mediterranean, the prevalence of lengthy voyages continued with trans-Atlantic trips to the USG fetching 52.5 and those to India at $2.395m for the east coast and $2.225m for the west coast. Meanwhile, the list has been building, and as such the Black Sea charterers, sensing a downturn, picked off ships at rates far below the 75 fixed last week. Worldscale 65 has been established as the rate for UKC-Med and the sentiment amongst both owners and charterers seems to be that the drop-off could continue. There are only a handful of stems remaining, and this could thus signal a build-up of tonnage into May dates. Meanwhile, the North Sea has been fixing and failing fairly regularly and rates have been following in line with West Africa. The Baltic Aframax market has moved a long way north and this has attracted Ice Class Suezmaxes into that market. Although thin on the ground in the list at the moment, it could add some pressure to North Sea cargoes.

Looking at the clean markets East of Suez and it was a quiet week post-Easter for the LR2s. Naphtha tenders were awarded earlier in the week for end-April liftings with the Korean accounts taking a couple of far eastern owners on subs. There were bits and pieces going on elsewhere, with 80 gasoil on subs into East Africa and a vessel with crude history on subs WC India/Brazil at US$2.525m. Rates are holding better than the LR1s but sentiment is softening and owners will be hoping for an increase in cargo base next week to try to stop the rot. On the LR1s, sentiment is soft and we expect the market to hit 125 for TC5 by early next week. There are cargoes going on subs but there is a lot of own programme fixing and rates have started to creep off already. MRs have been extremely quiet and the tonnage list looks pretty ugly as a result. A number of all bells all whistles vessels are on the water in ballast to the AG arriving around the 10-15 window, with very little cargo to speak of. Rates have softened already and we expect this trend to continue next week.

In the West and Easter has left several prompt TC2 vessels available in a weak or negative trans-Atlantic arbitrage. Apart from the usual ‘system’ cargoes such as Valero, CSSSA etc., very little delivered deals were put together. That which was seen was not on the prompt side, leaving a large wait for the spot ships and allowing more tonnage to compete. It was inevitable, then, that rates have taken a kicking. Owners saw earnings get closer to $12,000/day for the round trip. Back haul combo deals were also struggling as pre-Easter fixed cargoes versus post-Easter saw a 20 point loss. At 38 at 70 it hardly makes sense to ballast in for the triangulation, and TCE earnings on just TC14 are now minus $3,000/day. The only positive note in the Atlantic was that the weather abated; several storm systems had combined last week to add three or four days on to USAC ballast legs providing a small mercy.

Thanks for listening