Markets - It’s time for Aframaxes to shine

Nov 30 2018


North Sea and Baltic Aframaxes have experienced a firmer market when fixing cargoes with December laycans.

This firm trend will continue, Fearnleys predicted, as there is an imbalance in supply and demand in this area. The 3rd decade of December could get even more interesting with colder weather expected with the introduction of Ice Class restrictions in Baltic loading ports.

 

We have seen a week with a further upward correction in the Med and Black Sea areas. Cross-Med cargoes are still being booked for the 1st decade of December, while the fixing window from the Black Sea is already in the latter part of next month.

 

At the time of writing (Wednesday) a cross-Med voyage achieved around WS170-172.5 levels, while another WS5 points could be added for Black Sea voyages. TD19 (Ceyhan/Med) TCE is currently at about $34,500 per day.

 

Further upward pressure on rates could be expected in the weeks to come, as we are moving into the end of the year and the resulting festive season.

 

After recent unprecedented gains, the Suezmax market began to stall last week, as the volume of cargoes faded and tonnage lists began to reflect an over supply of tonnage in the West.

 

During the firm market, charterers had worked the CPC programme quite far forward on dates in order to secure adequate tonnage and now there is virtually nothing left to work for December dates, Fearnleys said.

 

TD20 has now fallen to the WS130 levels from a high of WS145 and is likely to continue to spiral downwards into next week.

 

Bunker prices have also fallen quite significantly over the past week, which has at least helped keep TCEs at respectable levels.

 

As for VLCCs, they experienced an active week with high volumes for all the major routes. The ‘older ladies’ are still in vogue but their supply is thinning. Owners with modern ships left to fix were optimistic, as they have multiple options on their choice of voyages.

 

Ships from the East were ballasting towards the West, where both WAfrica/East and Americas/East remained firm.

 

The outlook is looking rather healthy, as long as volumes remain where they were lately, Fearnleys concluded.

 

In the charter market, TEN said that it had signed an 18-month long charter with profit sharing provisions for a Suezmax with an unnamed oil concern.

 

TEN said that the deal increases the number of vessels fixed on secured revenue contracts since the beginning of the year to 24, the majority of which were agreed with options at an increased rate level.

 

The charters have an average duration of two years and are expected to add a minimum of $250 mill to revenues.

 

“The recent strength in rates across all tanker segments allows TEN to continue its tested long-term industrial employment approach of cash flow visibility and rate flexibility,” George Saroglou, TEN COO, commented. “With the first nine months of 2018 at historically low levels, the fourth quarter surge marks the end of a difficult period and signals 2019 as the year of positive and sustainable growth both in rates and asset prices.”

 

Meanwhile brokers reported that Teekay had fixed the 2007-built Aframaxes ‘FSL Hong Kong’ and ‘FSL Shanghai’ for two years at $17,000 per day each. Trafigura was said to have taken the 2009-built LR2 ‘Spruce 2’ for five to 10 months at $13,650 per day.

 

Koch was believed to have fixed the 2009-built MR ‘Omodos’ for one to two years at $13,000 per day, while Shell was said to have taken the 2006-built Handysize ‘Aktoras’ for 12 months at $12,000 per day.

 

As for newbuildings, Singapore-based ship management company Eastern Pacific Shipping has taken delivery of two ABS classed Aframaxes from Hanjin Subic.

 

Named ‘Iberian Sea’ and ‘Levantine Sea’, the two 114,000 dwt tankers were ordered in 2015.

 

Each vessel is equipped with a scrubber system and a fixed ballast water treatment system (BWTS).

 

Eastern Pacific Shipping has another two under construction, due to be delivered in the first quarter of 2019. They are the ‘Caspian Sea’ and ‘Tyrrhenian Sea’.

 

In addition, at the end of October, the company ordered two LR2s at Subic for $50 mill each.

 

In other newbuilding news, NGM was said to have contracted one, option one, Suezmaxes at New Times for 2020 delivery. 

 

Turning to the S&P market, Bumi Armada said it had sold the 1999-built VLCC ‘Armada Ulysses’, which was being held for a possible FPSO conversion project. 

 

Due to the sale of the VLCC, the company recognised a non-cash impairment of MYR41.4 mill in its FPSO business.

 

NORDEN has confirmed the purchase of two MRs mentioned in last week’s news. With these purchases, the company’s owned tanker fleet increased by four MRs this year bringing the total up to 58 vessels, including chartered vessels.

 

CEO, Jan Rindbo, said: “While product tanker market conditions have suffered from oversupply and weak demand this year, we expect an improvement towards 2020. Recently, the crude tanker market has recovered strongly, oil price has declined to a 12-month low and oil inventories have been drawn significantly.

 

“This points to a recovery in demand for product tankers and improving market conditions. We therefore believe this purchase is a good opportunity to take advantage of the relatively low prices on tonnage now, to increase the capacity,” he said.

 

The two vessels are expected to join NORDEN’s fleet next month and will be renamed ‘Nord Magic’ and ‘Nord Minute’.

 

Eurotankers was reported to have added a 2005-built Suezmax to its fleet for $19 mill, while Latsco was believed to have bought the 2009-built LR2 ‘Singapore River’ for $23.2 mill.

 

Beleaguered Aegean was said to have sold the 2003-built Aframax ‘Aegean Faith’ to fellow Greek interests for $12.3 mill and the 2009-built MR ‘Aegean Wave’ to undisclosed interests for $17 mill.

 

Viken was said to have purchased three 2009-2010-built Handysize vessels for $48.5 mill en bloc, while Transocean was reported as buying the 2009-built MR ‘High Pearl’ for $15.9 mill.

 



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October 2018

Who will replace lost Iranian exports- Interview with AET about the benefits of Singapore - ballast water - underwater ship inspections