Markets - No mid-winter cheer

Jan 12 2018

We are near mid-winter, so what of the VLCCs ‘winter-market’?

Cargo volumes have not been sufficient for the main routes and tonnage has built up over time, Fearnleys weekly report said.


Charterers have and will play their hands carefully and pressure on the rates will remain in force.


Earnings are around $8,000 per day for MEG/East and about $10,000 per day for WAfrica/East and they not expected to change in the near term. A large increase in volumes for all major routes is needed to change the present sentiment.


The Suezmax market continued to see limited activity last week, WAfrica remained particularly quiet again with plenty of available tonnage for the few cargoes that materialised.


Med/Black Sea at least saw more cargoes that needed coving but with a overhang of tonnage that has built up, rates unavoidably also declined in this area.


On a positive note in a suffering market, the USG/Caribs experienced increased volumes and steady fixing for those vessels in the area.


North Sea and Baltic Aframax rates fell marginally from last week due to a five day maintenance at Ust Luga. Early February looks a bit more interesting, as new ice is expected in the Gulf of Finland. However, the 2016 dreadful ice season looks good compared to this year’s thus far.


In the Med and Black Sea, we saw a small rate increase towards the end of last week. Owners were trying to hold back, and let the list of cargoes build up. For once, no one caved in and they managed to push rates above WS100.


However, this didn’t last for long as entering this week, an increasing tonnage list and almost zero activity pushed rates back down again, Fearnleys concluded.


Meanwhile, the Russian tanker loading port of Primorsk, in the Gulf of Finland, is to impose ice class restrictions on vessels from 26th January, a Russian shipping agent reportedly said on Thursday, adding that ice restrictions in other ports remained unchanged.


The Baltic weather forecasts for the coming weeks imply that ice is to build up and restrictions will apply in the event of ice thickness of 10-15 cm.


From that date, vessels without any ice class notation won’t be allowed to navigate the ice near Primorsk, while vessels classed to the minimum level will be allowed to navigate in ice under icebreakers assistance only.


One owner in a more bullish mood was Concordia Maritime. The company said that as an important part of fleet positioning ahead of the expected progressively stronger market, it had chartered in two more MRs, while also extending the contracts for two of the currently chartered MRs by a further year.


In parallel, a contract to charter out the P-MAX ‘Stena Performance’ for six months with an option for a further six months, was also signed. The vessel will be used primarily in the Middle East.


As with previous charters, these latest contracts are joint charters with Stena Bulk, and Concordia Maritime’s share amounts to 50%, the company explained. The vessels will be operated by an MR pool within Stena Bulk Product & Chemicals (formerly Stena Weco).


“We are acting based on our firm belief in a progressively stronger market from summer 2018 onwards. By chartering in a total of six vessels (50% each), we have now increased earning capacity significantly in a short period.


“At the same time, we continue our efforts to identify niche trades for our P-MAX vessels, where their unique properties are particularly beneficial. The new P-MAX contract is a good example of this. For our part, the contract means that we secure employment for the vessel for six months ahead, at a level clearly above the market and standard vessels,” Kim Ullman, Concordia Maritime CEO explained.


Remaining in the charter market, brokers reported that the 1999-built VLCC Maran Gemini’ had been fixed to Shell for between one and three months at $15,000 per day.


Repsol was believed to have fixed the 2017-built Suezmax ‘Dong-A Spica for three years at $19,400 per day, while the 2005-built Aframax ‘Seaheritage’ was reported taken by ST Shipping for 12 months at $14,600 per day.


Reliance was said to have fixed the 2011-built Aframax ‘Orange Stars’ for 12 months at $16,500 per day, while the 2017-built LR1 ‘Amazon Falcon’ was thought taken by Petrobras for 12 months at $14,500 per day.


In the S&P sector, Tsakos Energy Navigation (TEN) confirmed that it has sold the 2005-built Suezmaxes ‘Eurochampion’ and ‘Euronike’ for $65.2 mill gross, in a five-year sale and leaseback agreement.


The sale proceeds were used to reduce debt and add $16 mill of cash to TEN's balance sheet. The vessels were delivered to their new owners in late December, 2017.


Capital Product Partners board has approved the acquisition of the eco-type Aframax ‘Aristaios’ ( Ice Class 1C, built 2017, Daehan Shipbuilding) for $52.5 mill from the Partnership’s sponsor, Capital Maritime & Trading.


‘Aristaios’ is currently employed under a time charter to Tesoro Far East at a gross daily rate of $26,400. The Tesoro charter commenced in January, 2017 with duration of five years +/- 45 days.


The Partnership intends to fund the acquisition through available cash amounting to $24.2 mill and the assumption of a $28.3 mill term loan under a credit facility previously arranged by Capital Maritime with Credit Agricole and Investment Bank and ING Bank, as mandated lead arrangers and book-runners.


The only other sale of note reported concerned the 1996-built Aframax ‘Eagle Baltimore’ said to have been sold to undisclosed interests for $7.5 mill ‘as is’ Singapore, possibly for a conversion project.


In the newbuilding sector, reports were coming in that Singapore-based IMC had booked four, option four MRs at GSI. No other details were forthcoming.


China’s Dalian COSCO KHI Ship Engineering (DACKS) has started 2018 with a naming and delivery ceremony for a newbuilding VLCC.


The new ship was named ‘New Prime’ and handed over to its owner, China Merchants Energy Shipping (CMES), on 4th January, 2018.


She is the first of two vessels ordered by CMES. The second vessel is scheduled for delivery in April, 2018. 


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Sept 2018

SMM - scrubbers - coatings - drones - ethane powered tankers - MEG4 - contaminated fuel oil