Markets - Bumping along the bottom

Aug 12 2016


A slightly more active week for the VLCCs, as the MEG August loading programme is about to end.

Rates in the early part of the week dropped considerably, both in MEG and in West Africa, with earnings falling close to opex, Fearnleys reported.

However, owners started to resist and have managed to turn things around, although only marginally. As a result, rates came off the bottoms but further upside is likely to be hard work. Simply put - inadequate demand and too many ships for all the major VLCC routes, the broker said.

Suezmaxes in West Africa saw nochange from last week with rates continuing to suffer at a year low.

The list of available ships was still too large for any change to take place at the time of writing (Wednesday) and charterers were picking up ships quietly off market for the few cargoes worked.

If the current situation keeps up for long, it will only be a question of time before we see owners start to slow steam to try change the market balance. At time of writing with both Nigeria and Libya not even close to producing at a normal pace, we don’t see any rapid change to the prevailing market, Fearnleys said.

In the Med/Black Sea, the same scenario is evident, a surplus of ships in position for the few cargoes that are materialising, which is keeping rates at a Low ebb.

Aframax rates in the North Sea and Baltic softened even further compared to last week’s levels. Despite increased activity for both North Sea and Baltic, rates remained at bottom levels.

Until the abundance of available tonnage is mopped up, we don’t expect any immediate recovery in rates.

Med and Black Sea markets keeps breaking records, in a bad way. WS70 was the market number seen last week. This week mid-WS60s was fixed several times. For longer cross Med voyages, numbers went below WS60.

Owners were frantically trying to hide their positions, but were brutally caught out when 15 offered for a Sidi Kerir/Portugal cargo, Fearnleys concluded.

In other chartering news, Ocean Yield said it had taken delivery of the LR2 ‘Navig8 Supreme’ from Sungdong.

Following her delivery, she commenced a 13-years ‘hell and high water’ bareboat charter to Navig8 Product Tankers.

This is the last vessel out of four LR2s chartered by Ocean Yield to Navig8 Product Tankers.

A few storage fixtures were reported recently, including Tullow Oil taking the 2008-built VLCC ‘Kokkari’ for 7-9 months at $28,000 per day and Litasco fixing the 2015-2016-built Aframaxes ‘STI Oxford’ and ‘STI Grace’ for six months at $18,500 per day each.

Clearlake was believed to have fixed the 2016-built Suezmax ‘Seavigour’ for six months for $23,000 per day, while unknown interests were said to have fixed the MRs ‘Hellas Aphrodite’ and ‘Hellas Nemesis’ for six months at $14,500 per day.

In the S&P market, Navig8 Product Tankers, a joint venture between the Navig8 Group and DVB Bank, has entered into sale and leaseback agreements for three LR2s.

Signed with Bank of Communications Finance Leasing (BoComm), net proceeds will amount to up to $118.8 mill.

The company said that it intended to use part of the proceeds to repay existing loans used to finance the vessels’ newbuilding contracts under a multi-bank loan facility .

The sale and leaseback agreements will see the LR2s sold and delivered to BoComm under 10-year bareboat charters back to Navig8.

Included in the deal are purchase options to re-acquire the vessels during the charter period.

Winson was reported to have purchased the 2001-built VLCC ‘ Genmar Victory’ for $29 mill. She was believed to be earmarked for conversion to an FSO>

Singapore interests were said to be behind the purchase of the 2009 and 2010-built MRs ‘North Duchess’ and ‘North Marchioness’ for $20.7 mill and $22.3 mill, respectively. The deal also includes a bareboat charter to ENOC.

Two Handies were reported sold. Sea World Management was reported to have picked up the 2004-built ‘Oliphant’ for $13.5 mill, which includes a 2-year timecharter back to her owner at $14,500 per day. NORDEN was said to have disposed of the 2006-built Handy ‘Nord Mermaid’ for a price in the region of mid $13 mill. 

Reported leaving the fleet were the 1982-built FSO ‘Federal 1’ said to have been taken by Pakistan breakers for $205 per ldt under tow, basis ‘as is’ Jambi.

The Handysize parcel tanker ‘Stolt Emerald’ was sold to Indian breakers on P&C terms. She was beached at Alang on 4th August, according to GMS.

Meanwhile Gothenburg-based Ektank’s new 18,600 dwt intermediate product/chemical tankers newbuildings were designed jointly by Swedish ship designer Fartygskonstruktioner (FKAB) and Ektank.

Project, FKAB T28 is a 22,700 cu m, oil product & chemical Tier II tanker, designed for low fuel consumption and high cargo capacity with a density of 1.54 tonnes per cu m.

The vessels were ordered from Chinese shipbuilder CSSC Chengxi Shipyard in April, 2016 for delivery in 2018. 



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