Initially, activity picked up in the Atlantic with a steady flow of MEG cargoes to follow, fuelling owners sentiment and strengthening the rates by some WS10 points both for MEG/East and WAfrica/East, Fearnleys reported.
Cargoes were still expected for 2nd decade ex MEG, as eastern charterers have stretched long into the future to cover their requirements before the ‘Golden week’.
In the past week, the Suezmax market has finally seen some encouraging signs with a sudden flurry of activity in the 1st decade in West Africa, combined with consistent fixing volume in the Caribs and MEG.
As a result, a number of ships started to disappear off the availability list causing sufficient tightening to allow owners to force rates up. TD20 is currently at WS75 and cargoes working off the early mid 2nd decade window were experiencing further rate resistance, as owners became selective.
The Black Sea saw a similar rally with rates hitting WS85 for TD6. The outlook is for potential further firming ahead if volumes stabilise.
Aframax rates in the North Sea and Baltic came under downward pressure this week, as more available tonnage surfaced in the area. Rates took a hit as a lot of the stems in the area were covered with larger sizes. However, we expect the market to bounce back coming into 3rd decade fixing window.
The VLCC and suezmax markets are still quite firm and this might have a positive effect on the Aframax market going forward, Fearnleys said.
In the Med and Black Sea, owners are again finding themselves counting nickels and dimes to make a voyage work. We saw signs last week, but it was a fall of more than 20 points that owners had to contend with.
However on a positive note, ships are disappearing at record speed, so we might come out of this next week, Fearnleys concluded.
Meanwhile, WTI crude prices are currently trading at their widest discount to Brent for two years, with the spread hitting $7.07 per barrel on 25th September.
The Brent/WTI spread has averaged $5.32 per barrel in September thus far, some $1.62per barrel higher than that of August, Ocean Freight Exchange (OFE) said.
The gulf between WTI and Brent prices can be attributed to a few short-term factors. Brent prices have been underpinned by lower Forties production, due to planned seasonal maintenance over August and September, firm demand from European refiners post-Harvey, as well as high OPEC compliance with production cuts.
Turkey’s threat to further cut Kurdish crude exports fuelled bullish sentiment on Monday. In contrast, a swift rebound in weekly US crude production after Hurricane ‘Harvey’, as well as rising inventories weighed on WTI prices.
Robust Brent prices rendered WAF crudes less attractive to Asian buyers, with both Angolan and Nigerian cargoes from the October programme still unsold, as reported by Reuters. As such, this is expected to result in lower WAF exports to Asia in October.
However, the negative impact on tonne/mile demand is likely to be outweighed by an expected surge in US exports to Asia during the same loading period. With the arb to Asia open, around 4.86 mill tonnes of crude was provisionally fixed to move from the USGC/Caribs to the Far East. In comparison, around 4.56 mill tonnes was fixed for September loading while August volumes amounted to 3.03 mill tonnes, OFE said.
Firm demand for VLCCs loading in the Caribs has been drawing ballasters from Asia/AG, significantly reducing the position list in the AG. The number of prompt and open VLCCs in the AG fell by 16% week-on-week, underpinning the ongoing rise in TD3 rates.
Rates for TD3 jumped by WS15 points on the week to WS55 as of Wednesday. With average earnings for the key Caribs/Singapore route nearly three times that of AG/Singapore, owners have the incentive to lock in higher earnings for the longer voyages, despite the additional ballast days, OFE concluded.
There have been a few sales and leasebacks announced recently.
For example, Scorpio Tankers (STI) said it had agreed to sell and leaseback five 2012 built MRs - ‘STI Amber’, ‘STI Topaz’, ‘STI Ruby’,’ STI Garnet’,and ‘STI Onyx’ to Bank of Communications Financial Leasing.
As of Thursday, three of the five transactions have been completed, which has increased the company’s liquidity by around $21 mill in total after the repayment of the outstanding debt.
The sale price for each vessel is $27.5 mill, and STI will bareboat charter-in the vessels for seven years at $9,025 per day per vessel. The company also has three one-year options to extend the bareboat charter agreements beyond the initial term.
In addition, STI has purchase options beginning at the end of the fifth year and lasting until the end of the agreements.
In addition, d’Amico Tankers (DIS) signed a memorandum of agreement and bareboat charter contract with a company fully-owned by Sole Shipping Special Opportunities Fund II, for the sale and leaseback of the MR ‘High Priority’, built in 2005, for $13 mill.
This transaction will generate, net of the vessel’s existing bank debt, a positive cash flow of around $6.5 mill, contributing to the liquidity required to complete DIS’ fleet renewal programme, the company said.
Through this transaction d’Amico Tankers will maintain full control of the vessel, due to a five-year bareboat charter agreement with the buyer, with a purchase obligation at the end of the 5th year of the charter period.
Furthermore, d’Amico Tankers has the option to repurchase the vessel, starting from the second anniversary of her sale at a competitive cost.
Elsewhere, the 2006-built Aframax ’Ocean Mare , which was arrested in June this year, has been put up for auction in Singapore, according to Court records. The closing date for bids is 6th October.
The net value of bunkers on board the 106,004 dwt ‘Ocean Mare’ is Sing$239,582 (around $177,000), which is excluded from the sale and has to be paid by the purchaser. The Court stressed that the amount payable is not negotiable.
Owned by India’s Varun Shipping, the Aframax currently has a market value of $15.68 mill, according to VesselsValue.
In other news, Marenave’s last vessels have been sold.
The LR1s ‘Mare Pacific’ and ‘Mare Atlantic’, were sold for $5.9 mill and $5.4 mill, respectively. The 2001 built vessels were reportedly purchased by Greek-based Stalwart Management.
In the charter market, Reuters reported that the ULCC ‘TI Europe’ had been chartered to Statoil for oil storage duties.
She will be anchored off Malaysia to distribute crude oil around Asia, as needed.
‘TI Europe’ has receiving crude from the VLCC ‘Athenian Victory’ via a ship-to-ship transfer in the Strait of Malacca, shipping data on Thomson Reuters Eikon showed. ‘Athenian Victory’ loaded Angolan crude at the end of August.
The ULCC, owned and managed by Euronav, is one of four sisterships built in the early 2000s. The ‘TI Asia’ and ‘TI Africa ‘were converted to FSOs for the Al-Shaheen oil field offshore Qatar, while the ‘TI Oceania’ is currently stationed offshore Oman, Thomson Reuters Eikon data showed.
In the charter market, brokers reported that PBF Energy had fixed the 2009-built Aframax ‘Americas Spirit’ for 12 months at $15,000 per day.
Koch was said to have taken the 2016-built MR ‘Maritime Meridian’ for 12 months for $14,750 per day, while StenaWeco reportedly took the 2011-built MR ‘Miss Marina’ for six. Option six, months at $13,500/$14.250 per day.
Maersk Tankers was said ot have taken the 2011-built Handysize ‘Astella’ for 12, option 12, months for $12,250/$13,250 per day.
In the newbuilding sector, NYK was said to behind an order for four VLCCs at JMU for 2019-2020 deliveries. No price indication was forthcoming.