Therefore, the Caribs and the North Sea saw firming rates and charterers stretched well forward on dates, Fearnleys said in its weekly report.
MEG lacked activity and rates eased slightly, but further testing is required, as charterers are likely to try to shave the last done figure of WS70 for MEG/east voyages for modern units.
West Africa/East is stable and holding for now, backed by the strong demand in the Caribs.
Recently, Suezmax owners have found enough action to finally drive rates through the WS100 mark for TD20> A combination of a flow of early 2nd decade cargoes and growing delays in the Black Sea allowed the lists to start tightening.
The Black Sea initially felt the pressure with rates moving up into WS107.5 territory. This pressure then spilled over into the Med and West Africa.
The latter part of last week saw charterers take a pause in cargo offerings and thus the tonnage began to build up again. Currently, there is an element of slippage and rates have fallen off slightly. The week ahead has a more steady feel, as owners will unlikely allow levels to fall further.
Aframaxes trading in the North Sea and Baltic experienced a massive drop in rates this week.
Despite some bad weather in the region and delays in strategic ports, rates came off as a result of less activity. Furthermore, the majority of available cargoes were covered on oil-company relets adding to the downward pressure on rates.
Going forward, we might see a positive effect from firmer neighbouring markets. The Med and Black Sea continued to be a tricky market to call. Rates continued to move chunks at a time, in both directions.
Owners are now fixed on the heavy 3rd decade Black Sea programme, while the charterers are pointing out that there is not enough going on to even employ their own tonnage.
We believe the owners might be right this time around, but the question is - when and for how long will it last? Fearnleys concluded.
Elsewhere, firm naphtha demand in Asia drew more cargoes from the US Gulf Coast in October than in recent months, Ocean Freight Exchange (OFE) reported.
At least five tankers (four LR1s and one MR) were fixed last month to load naphtha from the USGC to Japan and South Korea.
In comparison, around one to two tankers per month were fixed over the past three months.
Naphtha moving from the USGC to Asia is typically of the heavy or heavy full-range grade. While heavy full-range naphtha is usually used as reformer feedstock, it can also be processed in petrochemical crackers.
Heavy refinery maintenance in the AG, as well as the unplanned partial outage at Statoil’s 240,000 barrels per day Mongstad refinery, tightened naphtha supplies in Asia, contributing to the ongoing strength in naphtha cracks.
Saudi Aramco’s 225,000 barrels per day condensate splitter at Ras Tanura was shut for a month in October, while ORPIC’s 106,000 barrels per day Mina Al Fahal refinery shut for 45 days starting 3rd October.
Asian naphtha cracks hit an almost two-year high last Friday, as demand continued to outpace supply. High LPG prices have rendered the fuel unattractive to steam crackers, boosting demand for naphtha.
In order to meet robust demand, Asian buyers have been drawing cargoes from Europe with November arb volumes expected to hit a four-month high of 1.3 mill tonnes, as reported by Reuters.
However, supplies from Europe are still not sufficient to meet the shortfall. Plagued by the same issue of high LPG prices, European petrochemical buyers have raised naphtha demand. PJK data indicated that naphtha inventories in the ARA region for the week ending 27th October are at their lowest in almost nine months.
As such, we expect Asia to remain an outlet for US naphtha in the short run, OFE concluded.
In the newbuilding sector, VesselsValue has calculated that around half of this year’s total deliveries have yet to materialise.
Only 1,220 vessels out of 2,440 have hit the water thus far this year, meaning 50% of the 2017 orderbook is outstanding as the final nine weeks of the year approaches.
VesselsValue data showed that almost 70% of the LPG carrier sector were delivered to their owners, followed by bulkers at around 68% of delivered ships. Tankers took third place with around 63% handed over thus far this year.
As vessel deliveries typically slow down towards the end of the year, many sectors can expect a high proportion of the orderbook to hit the water in future years, VeselsValue said; “If the owners wait a few weeks, allowing the delivery to slip into the new year, the vessel is considered a whole year younger.”
Sales and leasebacks were still proving to be popular.
One of the latest tanker deals concerned Hafnia Tankers who completed its first sale and leaseback in the Japanese market with the 2010-built LR1 ‘Hafnia Africa’.
The vessel has been sold to a large Japanese private shipowning company with an eight-year bareboat charter back with annual purchase options from year four onwards. The company also has an option to extend the lease to 12 years.
This transaction entailed the sale of the vessel at market value and a fully levered lease arrangement, which gives rise to a positive liquidity effect of around $8.5 mill and further adds to the already strong cash position, Hafnia said.
Fearnley Securities acted as sole financial advisor to Hafnia for this transaction.
In another deal, Crowley Alaska Tankers, part of Crowley Maritime Corp, has signed an agreement to purchase three tankers from SeaRiver Maritime, ExxonMobil’s US marine affiliate.
Crowley will then charter them back to SeaRiver under varying multi-year terms.
The deal is still subject to regulatory approval.
“Key to ensuring the success of this transaction and ongoing operations will be obtaining the necessary regulatory approvals to serve the Alaska and West Coast markets. Crowley will work together with regulators to ensure a seamless transition and continued safe operations,” the company said
The tankers in question are ‘Liberty Bay’ and 'Eagle Bay', each of which have a capacity of 800,000 barrels and transport crude from Alaska to West Coast refineries; plus the tanker ‘SR American Progress’, which has a capacity of 342,000 barrels and transports refined petroleum between US Gulf and East Coast ports.
By the end of 2017, Crowley will be operating 37 Jones Act qualified large tankers in the US with a combined capacity of more than 10 mill barrels.
Among the fleet is a tanker and an articulated-tug-barge (ATB) already on charter to SeaRiver.
Brokers have reported the sale of the 2010-built VLCC ‘Gener8 Zeus’ for $53 mill to International Seaways, while Polemis was said to be behind the purchase of the 2017-built ‘RS Kaystros’ for $49.7 mill.
In addition, they said the NGM was negotiating the purchase of the 2007-built Aframax ‘LR Aldebaran’ for $17.5 mill.
Norwegian interests were said to be negotiating to purchase the 2007-built MRs ‘Atlantic Diana’ and ‘Atlantic Blue’ for $16.3 mill each.
In the charter market, ST Shipping was said to have taken the 2015-built MR ‘Nord Sustainable’ for 12, option 12 months at $14,750 per day, Navig8 was said to have fixed the 2009-built Aframax ‘Mare Nostrum’ for six, option six months at $15,650 per day and $16,650 per day for the option period.
In the newbuilding sector, BoCom was said to have declared options for another two Suezmaxes from New Times at $51 mill each. They will be bareboat chartered to Trafigura, plus purchase options.
Rumours were circulating at COSCO Energy Transport was negotiating for four VLCCs, three Suezmaxes, five Aframaxes and a couple of MRs at local shipyards- DSIC and CSSC Offshore.
Elsewhere, Nisshin Shipping was said to have ordered four 19,700 dwt stainless steel Tier II chemical tankers at Usuki for $33.5 mill each. They are to be delivered during 2020.