Markets - No change

Jul 12 2019

Much the same was experienced in the VLCC market this week with limited inquiry, stagnant rates and too many available ships seeking employment, Fearnleys reported.

Numerous older and restricted ships continue to be targeted for financial reasons where available. Rates are currently in the very low WS40’s MEG/eastbound, while more modern vessels are looking at rates in the upper WS40’s from both MEG and West Africa, depending on the voyage and terms.


The Atlantic region was quiet, with the only ripples of interest being some US Gulf export possibilities, after this market dropped down to $5 mill or just below for the benchmark USG/South Korea trade.


The West Africa Suezmax market is still feeling the effects of eastern ballasters, and West Africa/Continent trips were fixed below WS60.


The front-end of the tonnage-list is still high, so there will be no signs of improvement this week.


In the East, the 30-day tonnage-count is almost at its lowest this year, but we are still seeing ships willing to fix around WS70 MEG/East, Fearnleys said.


Cargo activity was good, so some upward pressure could be seen in MEG during the week to come.


The North Sea and Baltic Aframax markets continued to move sideways in the past week, with the exception of a small setback for cross-North Sea voyages, which was as a result of too many relets open in the area, with little cargoes left for other owners to fix.


In the Mediterranean and Black Sea, cargo demand grew during the week, as the build-up of available tonnage increased. Luckily for owners, this demand was satisfied by a rush of cargoes coming onto the market on Tuesday.


However, the tonnage build up and recent increase of cargo activity did not result in a noteworthy rate fluctuations. It seems supply is balancing out demand, and therefore rates continued to move sideways.


For example, TD19 remained around the WS90 mark all week.


It will be interesting to see how the market develops towards the end of the month, especially in the North, as more ships are leaving the area, Fearnleys concluded.


As for period rates, crude remained stable this week with substantial premiums being paid over the spot market, Alibra Shipping reported.


In the clean sector, there was limited period activity reported with just a few long term fixtures seen, ranging from three to five years.


Oil prices came under pressure, due to weak demand concerns. In its latest short term energy outlook, the EIA downgraded its forecasts for global oil demand to just 1.1 mill barrels per day, Alibra said.


All eyes must be on the Persian Gulf situation going forward.


In the charter market, TEN has confirmed an up to 36-month charter to a major European oil concern, for a Suezmax currently operating in the spot market.


The fixture was concluded on a minimum rate with profit sharing provisions to capture any freight upticks during the life of the contract, TEN said.


The gross revenues expected over the maximum period of this charter are estimated to be in the region of $23 mill.


Brokers reported that Concord had fixed the 2007-built LR2 ‘Maersk Penguin’ for 30 months at $19,000 per day, while Vitol took the 2016-built Aframax ‘Spirit II’ for two years at $23,000 per day.


Flopec was said to have fixed the 2005-built MR ‘Markos 1’ for 12 months at $14,600 per day, while STI took the 2007-built Handysize ‘Alice 1’ for 12 months at $13,000 per day.


In the newbuilding sector, Navantia has delivered the fourth and last Suezmax to Ibaizobal on 10th July.


The ‘Monte Ulia’ will join her sisters on charters to CEPSA and Total.


It was thought that two option remain to be declared.


Elsewhere, Wah Kwong reportedly ordered two scrubber fitted VLCCs at DSIC for 2021 deliveries. The price was said to be $85 mill per ship and the contracts were signed in co-operation with CSIC Leasing.


Finnish energy concern Neste was believed to have ordered two Ice Class 1A dual fuel Aframaxes at HHI for $70 mill each, while Samsung said it had won orders for two Suezmaxes from an undisclosed Panamanian-based owner for about $125.4 mill in total.


The vessels are scheduled for delivery before March, 2021, Samsung said.


Both vessels will be fitted with ballast water systems and selective catalytic reduction (SCR). In addition, the SVESSEL, the first smart ship system in the South Korean shipbuilding industry developed by SHI, will be fitted in the two tankers.


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