Markets - Softening rates scenario returns

May 18 2018

After a rather busy time for VLCCs recently, activity stalled this week and along with the sentiment, rates softened.

With the current stronger bunker prices, rates are not expected to pick up again in the near future. However, thus far rates are mirroring last-done levels East of Suez, Fearnleys reported.


The Atlantic saw firmer rates, with a tighter tonnage list specifically in the Caribbean/US Gulf area. The momentum seen here has persuaded certain owners to ballast from the East in order to secure long haul business at more ‘decent’ levels.


Suezmaxes experienced a positive week in terms of cargo activity. For example, West Africa was particularly busy with 3rd decade May dates clearing out tonnage. However, rates did not respond as sufficient tonnage was available. Many East ballasters have targeted West Africa, rather than MEG, and with Rotterdam now more fluid, charterers have had the pick of ships.


TD6 was steady at WS87.5 with earnings above $10,000 per day, which is respectable considering bunker prices have risen by over 20% in the last two months.


The outlook for the week ahead is steady provided that cargo flows continue, Fearnleys said.


Rates in the Baltic finally improved a few points after remaining flat for quite a while. The market has got a tighter feel about it going forward. Vessels were sitting off discharge ports waiting to berth, while other vessels drifted awaiting orders.


Rate wise it seems that the short-haul trades in the North Sea and the Baltic is where the upside remains for now. The last decade of the month appears busy cargo wise.


In addition, a busier programme out of the West Coast Norway could be a main driver for a further firming in rates, the broker said. 


In the Med and Black Sea, a positive correction has finally been seen. A lot of ships have left the area and the position list finally points towards the owners advantage.


Last done from Black Sea was WS92,5 and if we can maintain the recent activity, this could look promising for the rest of the week, Fearnleys concluded.


Brokers have recently reported that Shell fixed the 2008-built LR2 ‘Clio’ for 12 months at $14,750 per day, plus the MR sisters ‘Sunny Day’ and ‘Sunny Dream’, also for 12 months at $12,750 per day each.


Other MR fixtures reported included the 2008-built ‘Hellenic Enterprise’ believed taken by ST Shipping for six months at $12,750 per day and the 2006-built ‘Tavrichesky Bridge’ fixed to ExxonMobil for 12 months at $13,750 per day.


In the newbuilding sector, reports came in that troubled South Korean shipbuilder Sungdong had lost its remaining orders - five Aframaxes for Kyklades.


South Korean courts were thought to be assessing Sungdong's viability. A recent assessment had found that the yard's liquidation value was much higher than its worth as a going concern, but in March, South Korea's government indicated that it wants to keep Sungdong open as a repair yard and a supplier of ship blocks, local media reported.


Sungdong has been under court receivership since April, and Deloitte Anjin will perform another assessment of Sungdong's prospects in order to recommend rehabilitation or liquidation they said.


Elsewhere, TEN has been linked with an order for two LR2s at Daehan, but the company had not confirmed this by the time this newsletter was published.


In a rather unusual move, the Saverys family’s CMB was thought to have ordered two Aframaxes at Hanjin HIC for $45.5 mill each for 2019-2020 delivery.


If confirmed, this would be a new departure for the Antwerp-based family, well known in the container and drybulk sectors.


Another newcomer to the tanker sector, Niovis, was believed to have ordered one, option one MR at Hyundai Mipo for $35 mill.


In the S&P segment, BP Shipping was thought to have shed three 2005-built MRs to undisclosed interests for $10.7 mill each.


Hellenic Tankers was believed to have committed $22.5 mill for the purchase of the 2004-built VLCC ‘Takamine’ , while Stealth was said to be the buyer of the 2010-built Aframax ‘United Grace’ at auction for $22 mill.


Finally, Indian buyers were thought to have purchased the 2003-built Handysize ‘Cielo di Milano’ for $8.25 mill.


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