Markets - Uncertainty creates opportunities

Oct 04 2019

An action packed week in the VLCC market, as freight rates surged, due to the latest geopolitical events, including the US sanctions recently placed on certain Chinese shipping companies.

A tightening position list in every loading area resulted in all ship classes being workable, Fearnleys reported.

Rates moved towards three digits for MEG/East voyages with corresponding earnings in the mid $60,000 to $70,000 per day, depending on the voyage.

Coupled with an active West Africa and Brazilian export market, the owning communities’ are currently involved in the Golden week celebrations.

All Suezmax markets were also super bullish, as cargo activity kept increasing.

US Gulf was looking very tight, which kept the pressure on the whole Atlantic market.

The MEG/East market is now in three digits, which makes owners loath to ballast to West Africa. It seems as though the bullish sentiment will continue, the broker said.

Tonnage count, both in West Africa and the MEG, is at its lowest this year, and it doesn’t appear that the Suezmax market will stop increasing in the near term.

As for Aframaxes, in the North, the market continued to firm this week, as activity out of the Baltic and North Sea pushed rates higher.

Voyages of a longer duration kept some vessels out of the market for a number of days more per voyage and, as a result, tightened the tonnage list.

Although a few vessels are returning from the Med to benefit from the market going forward, we expect a very busy fixing window in the 3rd decade of the month, maintaining a firm sentiment going forward.

Similarly, the Mediterranean and Black Sea market remained firm and rates continued to climb. This was due to the healthy amount of cargoes entering the market, which allowed owners to keep the pressure on rates.

In the near future, we expect cargo activity to slow down a little, and combined with fact that the rate levels currently being fixed are very close to Suezmax-levels, we may see a slightly less firm sentiment in the week to come, Fearnleys concluded.

In the period market, VLCC rates increased on average to $38,000 per day for 12 month charters, Alibra Shipping said.

However, clean rates remained relatively flat, although sentiment going forward was positive.

Oil prices dropped this week on the back of China’s latest PMI manufacturing index falling for the fifth consecutive week, Alibra said.

Immediately following the sanctions announcement, indicative rates for VLCCs from the US Gulf Coast to China surged to $9.8 mill lumpsum on a voyage basis from $6.2 mill in early September, Reuters reported.

Meanwhile, brokers have reported that ExxonMobil has fixed the 2018-built Aframax ‘Sea Puma’ for three years at $23,400 per day.

In other news, Tufton Oceanic Assets has agreed to acquire a crude oil tanker for $19.9 mill.

This acquisition will bring the company’s fleet up to 16 vessels.

The unnamed vessel is timechartered to a major tanker operator for two years at a fixed floor rate, plus a profit-sharing scheme.

Hafnia has agreed with Gestion Maritime to acquire two MRs, ‘StenaWeco Andrea Corrado’ and ‘StenaWeco Caterina Corrado’.

The vessels were built in 2015, and are expected to be delivered during October/November.

Brokers put the price at $31 mill per vessel and said the deal came with a 12 month charter at $16,625 per day. 

Furthermore, on 30th August, 2019, Hafnia agreed to sell the 2004-built MR ‘Hafnia Atlantic’. She was delivered to her new owner on 11th September, 2019.

On 24th September, 2019, Hafnia also signed a $473 mill senior secured term loan and revolving credit facility to refinance its existing $360 mill and $236 mill facilities, maturing in 2023and 2022, respectively.

The security package included 33 vessels consisting of two LR1s, 17 MRs and 13 Handysize vessels.

Elsewhere, Watson Farley & Williams (WFW) has advised maritime finance firm FDX Offshore (FDX) on its acquisition of Singapore’s tanker pool operator Womar Logistics for an undisclosed sum.

The partnership intends to expand its chemical tanker pools, as well as initiate and grow independent pools in other vessel classes.

FDX is led by managing partner, Jake Scott and partner, Andy Tuchman, who will both become Womar board members.

Brokers have reported that the 2001-built Aframax ‘Happy Century’ has been sold to Karadeniz Holdings for $12.5 mill. She will be converted probably into a power plant.

GulfNav has reportedly sold three 2009-built and one 2005-built  LR1 for $17.8 mill each for the 2009-built vessels and $10.4 mill for the earlier built unit.

The buyer was thought to be Leon Shipping & Trading.

Danish finance interest Dee4 Capital was thought to be behind the purchase of the 2006-built MRs ‘Freja Hafnia’ and ‘Citrus Express’, plus the 2010-built MR ‘Orient Star’.

Asiatic Lloyd was said to have purchased the 2009-built MR ‘Glenda Morgan’ for around $19 mill. She recently passed her Special Survey and is BWTS fitted.

Maersk Product Tankers has confirmed that it had agreed to purchase seven Handysize vessels from MISC.

The vessels are of shallow draft design with a good cargo intake and an increased chemical/IMO capability.

“In line with our strategic goal of developing a dynamic fleet and our belief in the tanker market, this acquisition will enhance our position in the market,” said Soren . Meyer, Maersk Tankers’ Chief Asset Officer.

Maersk has already taken delivery of the first vessel, the 2009-built 37,961 dwt chemical tanker ‘Bunga Akasia’, which was renamed ‘Hans Maersk’.

The remaining vessels are expected to be delivered over the coming months.

Overseas Shipholding Group (OSG) has taken delivery of two MRs at Hyundai Mipo Dockyard.

The tankers, named the ‘Overseas Gulf Coast’ and ‘Overseas Sun Coast’, are fitted with an exhaust gas cleaning system.

They will be operating in the international market under the Marshall Islands flag, with both vessels having entered into a 12-month timecharter.

Following this initial contract period, OSG said that it anticipated that the vessels will operate under the US flag.

Sam Norton, OSG’s President and CEO, explained “An important – although still provisional – initiative in the US House of Representatives’ annual National Defence Authorisation Act seeks to augment the current Maritime Security Programme with a new Tanker Security Programme.

“The Tanker Security Programme as conceived would, if made law, create a fleet of up to 10 US flagged MR tankers in a programme effectively replicating the structure of the current MSP programme.

“Our commitment to supporting this initiative, and the national defence objectives, which it targets, is most visibly evident in our investments in the ‘Overseas Gulf Coast’ and ‘Overseas Sun Coast’. Both vessels will be made available to join this programme if passed into law in the coming months.”


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