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Tanker market report for week to Oct 4

By • Oct 4th, 2013 • Category: Tankers

The Coracle tanker market podcast for Oct 4, 2013 in association with Braemar-Seascope

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Thanks for downloading the VLCC Tanker Market report podcast from Coracle and Braemar Seascope for October 4th 2013.

There have been some very interesting developments in the VLCC market this week as rumours circulated that problems were afoot in the Nova Tankers pool. This was followed by the official announcement that OTC would be withdrawing their ships and further rumours revealed the reason for this was the imminent removal of the Moller vessels from the pool. Further stories from the S&P market seemed to confirm that Oaktree Capital were looking for finance for Genmar’s purchase of the Moller fleet to join the Unipec controlled Unique Tankers. Further oil company controlled vessels will of course have an effect on available cargoes for the rest of the fleet and the full implications of such a deal will take some time to permeate the market. The usual philosophy is that tonnage fixed to an oil company on a management basis does have the luxury of seeing their cargoes, however, they are not protected from the lows of the market and they have no flexibility to try to maximise their earnings elsewhere. If the funding is put into place we are sure the party will be bigger in Copenhagen than anywhere else but only the future will prove which side got the better deal, other than those arranging the finance for which it’s a win/win!

Meanwhile this week in the Arabian Gulf, despite the larger volumes of fixtures over the last seven days, the weaker links always means that although there have been opportunities to push the market up, it is simultaneously being eroded in a “three steps forwards, two steps back”, scenario. Hence after an additional 36 fixtures reported this week , of which the majority were reported just on Monday and Tuesday but we have only seen the market improve to 270 at 36.5 AG/East. The difficulty comes as independent owners push hard to move into positive earnings, while oil company controlled vessels accept last done or less just to get fixed. Vessels fixing AG/West have been sporadic and the rates have remained steady where they were last week, currently 280 at 24 AG/West is subjects with other charterers attempting less.

Fixing dates for AG/East remain in the late teens, while western fixtures are now looking for 25-30/October laycans. As we hear in a minute, the round trip calculations show operating costs for a VLCC trading AG/East on a time charter equivalent return.

West Africa has proven to be a steady source of cargoes as we approached end October, early November laycans increased the volume of fixtures and with it leant firmness to the market. Earlier in the week fixtures were concluded 260 at 37 for West Africa/China. As the week progressed 37.25 was reported and then there seemed to be some confusion over a Glasford fixture off earlier dates, 25th October 260 at 40, or 37, the truth seems to have been buried and perhaps only the participants know the reality. The natural fixing dates from this area have now moved into November. There have not been any reported fixtures for West Africa/UK Cont Med or US Gulf this week.

The 30 day availability index shows 53 VLCCs arriving at Fujairah of which six are over 15 years old, compared to 56 last week. The total number of fixtures from the AG is now 81 which proves we are approximately two thirds through the month if we expect another month of 110 reported fixtures.

The bunker price is $618/tonne, up $11/tonne from last week. The freight rate for 280 AG/US Gulf is 24, the same as last week making owners earnings, assuming one way and excluding any ballast, at 13 knots laden, this equates to $25,800/day. The round trip Cape Laden at 13 knots and Suez ballast at 11 knots returns minus $1,900/day . The rate for 270 Ras Tanura/Ulsan is 36.5, up 2.5 point from last week, making owners’ earnings $12,100/day.

Thanks for listening