A combination of increased seasonal volumes, the recent ban on certain Chinese ships for breaching Iran sanctions, and charterers being reluctant to take ships with a Venezuelan trading history, has significantly affected tonnage supply, Fearnleys explained in its weekly report.
As a result, charterers reached forward date-wise to secure tonnage, fuelling an already red-hot market. All other crude segments, Aframaxes and Suezmaxes, were working in tandem, leaving little room to find alternative freight options.
By the middle of this week, daily VLCC earnings were up to $130,000 per day, while falling bunker prices will contribute further to the rate rise. By Thursday, reports were circulating that rates had hit $150,000=$160,000 per day.
In short - a perfect storm, Fearnleys said.
Suezmaxes followed their larger consorts in this fast rising spiral that is the freight market today.
A rate assessment given is no longer valid after one hour, as charterers scrambled to cover their cargo requirements.
It seemed that owners could pretty much pick a number and then get fixed on subs.
We’re experiencing a momentum effect that we have not seen in years and owners are now firmly in the driving seat, keen to make amends from the dire freight markets we have had over the last years, Fearnleys said.
We expect the balance of this week to remain very firm with owners having both hands firmly on the steering wheel.
As expected, Aframax rates also picked up quite substantially both in the North, as well as in the Med.
Rates in the Baltic and North Sea increased in line with vessels leaving the area for longer haul trips thus not coming into their natural fixing position again.
Delays caused by bad weather and delayed delivery windows in strategic ports also kept an upward pressure on rates.
However, rates in the Mediterranean and Black Sea came off slightly this week, as ships from other areas discharging in the Med have offered charterers more tonnage to choose from in the current fixing window.
In the week to come, we expect rates to continue to firm further, as both the markets in the North and in the Caribs remain firm, Fearnleys concluded.
Turning to the period market, crude rates continued their surge this week on the back of the bullish spot market, Alibra Shipping commented.
VLCCs averaged $50,000 per day for 12 month charters, their highest for three years.
The clean sector also showed an optimistic sentiment with interest seen in longer period business, which is always a good sign (-Ed).
Oil prices fell for three consecutive days this week (up to Wednesday), as US/Chinese tensions intensified ahead of trade talks scheduled for the end of this week, Alibra said.
Brokers have reported a selection of longer period fixtures, including Petrobras taking the 2010-built VLCC ‘Nave Synergy’ for two years at $33,000 per day, while Suezmaxes fetched between $25,000 and $29,000 per day for 12 and 24 months business.
Trafigura was said to have taken a 2019-built Aframax for six months at $26,500 per day, plus options and another for 12 months at $24,000 per day.
Finally, ExxonMobil was believed to have fixed the 2014-built MR ‘High Fidelity’ for three years at $17,000 per day.
In the newbuilding sector, an update has been circulated on the announcement of the granting of an option to Okeanis Eco Tankers (OET) by entities controlled by OET’s sponsor and chairman, Ioannis Alafouzos, to acquire two ECO design, scrubber-fitted Suezmaxes under construction at Hyundai Samho Heavy Industries for delivery in August, 2020 at $64.5 mill per vessel.
As Suezmax values have risen and newbuilding delivery timelines extended into 2021 in the period since its granting, the option is presently well in-the-money and accretive to NAV, OET said.
In addition, with the recent dramatic firming of the tanker spot and timecharter markets and the availability of low cost, high LTV financing, OET is highly confident that exercise of the option will require no new issuance of equity.
Accordingly, OET’s Board of Directors has agreed to exercise the option.
In addition, OET has received firm indications for low cost, high LTV pre- and post-delivery financing from multiple large and reputable financial institutions.
On 6th October, 2019, a naming and flag raising ceremony was held in Vladivostok for Sovcomflot’s (SCF) latest Arctic shuttle tanker- Mikhail Lazarev’.
She was ordered by SCF to ship crude oil for the Novy Port project, under a long-term agreement between SCF and Gazprom Neft.
The 41,000 dwt Arc7 ‘Mikhail Lazarev’ is the latest in a series of shuttle tankers of the ‘Shturman Albanov’ series, designed for the year-round transportation of crude oil from the Gulf of Ob (the Kara Sea) for the Novy Port project, operated by Gazprom Neft.
The first three ships in the series were delivered in 2016 and have since transported 9.5 mill tonnes of oil across the Northern Sea Route.
NYK has taken delivery of the VLCC ‘Tanzawa’ – the first new NYK-owned vessel to be fitted with a scrubber – and the ‘Takaroa Sun’, a methanol carrier equipped with 2-stroke dual-fuel engine technology.
‘Tanzawa’s naming and delivery ceremony was held on 3rd October at the Kure shipyard of Japan Marine United.
Takaroa Sun was built at Hyundai Mipo Dockyard and funded through NYK’s green financing initiative established to support environment-friendly projects.
The vessel, which is equipped with the MAN Energy Solutions second-generation B&W ME-LGIM 2-stroke dual-fuel engine that runs on both methanol and conventional marine fuel, will be chartered to Waterfront Shipping Co (WFS), a wholly-owned subsidiary of Methanex, the world’s largest producer and supplier of methanol.
Brokers reported that Namura had won an order for a VLCC from Kyoei Tanker and that the Central Group had raised the number of newbuildings to seven by ordering another three MRs at HMD at $40 mill each. They were described as high specification and fitted with scrubbers.
In the S&P sector, Idemitsu was said to have purchased the 2010-built VLCC ‘Nagararagawa’ for $48 mill, while the 2001-built Handysize ‘Searambler’ had been sold to Russian interests for $7.9 mill.