Markets - A light at the end of the long dark tunnel

Oct 05 2018

After a year when rates have scraped the bottom, VLCC owners are finally seeing the early stages of a winter recovery.

Demand has picked up in all loading areas, while storms/delays in Asia kept tonnage tied up for longer periods in discharge ports, Fearnleys said in its weekly report.

With WS70 within striking distance for WAfrica/China trips, VLCC owners were now earning around $25,000 per day, despite increased bunker costs.

A good level of activity was reported for Suezmaxes in all areas during the past week. Rates have slowly, but steadily, crept up daily – but so have the bunker prices, which meant that the TCE had not returned to the black on Atlantic round voyages, thus far.

Overall, the large amount of activity is driving this market at the moment and owners are expected to keep their foot firmly planted on the gas pedal while they still can.

As for Aframaxes, the first days of last week were quite busy, and there was a sense of optimism among owners trading vessels in the North Sea and Baltic.

Charterers on the other hand sat on their cargoes, and after a few quiet days, the market dropped by about WS10 points across the board.

As earnings once again went down to a minimum, it’s only a matter of time before they bounce back to previous levels, the broker said.

In the Med and Black Sea, the market remained at decent levels. Rates stabilised at around WS110 for cross-med trips, giving a return of around $8,500 per day.

We are still waiting for the Turkish Straight delays to increase further, but at time of writing (Wednesday), delays are around four days each way.

As there is still a decent amount of tonnage in the area, we expect the market to remain fairly balanced, at least until the expected weather delays kick in, Fearnleys concluded.

Other chartering news included trading house Trafigura terminating the timecharter of the MR ‘Dalmacija’, owned by Croatian shipping company Tankerska Next Generation (TNG).  

After nearly three years on charter since her delivery, both companies have mutually agreed to end the contract.

‘Dalmacija’ has been redelivered with compensation agreed for an early re-delivery, in line with the charterparty.

In November, 2015, the ship was chartered at $17,750 per day. The three-year contract included a one-year option at $19,750 per day, according to VesselsValue.

Elsewhere, the first shipment of condensate from the INPEX-operated Australian Ichthys LNG project has been shipped, the company said. 

The cargo was loaded from the FPSO 'Ichthys Venturer’ anchored in the Browse Basin, about 220 km off the northwest coast of Western Australia.

Brokers also reported the charter of the 2000-built VLCC ‘Chryssi’ to PIOC for 12 months at $18,900 per day.

A couple of LR2s were reported fixed for 12 months each. These were the 2010-built ‘Four Sky’ to undisclosed interests for $15,500 per day, the same level paid by Trafigura for the 2015-built ‘Seriana’.

The 2009-built Aframax ‘Seavoyager’ was also reported fixed to Shell for six months at $15,250 per day. In addition, the oil major was said to have taken the 2018-built MR ‘Nord Joy’ for six, option six months at $13,100 to $14,500 per day for the option period.

In the S&P sector, Ship Finance International (SFI) has announced that it is to sell the 2001-built VLCC ‘Front Ariake’ to an unnamed third party.

Delivery to the new owner is expected later this month, and the net sales price will be around $20.7 mill, including $3.4 mill in the form of an interest-bearing loan note from Frontline.

The book value of the vessel is about $27.6 mill, thus an impairment is expected to be recorded in the company’s third quarter results, SFI said.

The company also explained that divesting of older vessels is part of its strategy to continuously renew and diversify the fleet.

Following this transaction, SFI will be left with four VLCCs, which are on charter to a Frontline subsidiary.

Elsewhere, the 2011-built VLCC sisters ‘DS Venture’ and ‘DS Vision’ were reported sold to Mingsheng Financial Leasing for $56 mill each.

In the newbuilding sector, CSET was believed to have ordered two Panamaxes from CSSI-GSI for 2020 dleiveries.



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