Markets - VLCC rates retreat

Apr 13 2018

In general, VLCCs activity has slowed dramatically in the past week.

For the MEG, Fearnleys said that we were now between months with about 120 fixtures done for April, which should still leave some more to be concluded. May stem-confirmations were not expected until this weekend.


In addition, West African activity was far from sufficient and rates in general were under pressure for all major routes.


MEG and West African rates to Eastern destinations again dipped below $10,000 per day and it is hard to see any major upswings this side of the summer, Fearnleys said.


Suezmaxes saw a steady flow of cargoes after the Easter break. The volume in all geographical areas gave owners a bit of false optimism and there was a slightly more bullish tone from hungry owners who had a choice of cargoes rolling on from the pre-Easter short week.


The area that has seen most prolific activity of late was MEG, which saw large volumes moving with most barrels going West. Last week, West Africa took a back seat and TD20 found a level at WS55 and is currently steady.


Black Sea business came off its highs and is currently down to WS77.5 for TD6. This could soften further in the week ahead with no significant delays at present in the Turkish Straits.


Increasing oil prices have pushed up bunker levels putting further pressure on the meagre TCE’s.


Charterers have been holding back their North Sea and Baltic cargoes for some time and as a result we had a rush of fixing this week. That has resulted in a an upward correction, and at the time of writing (Wednesday) there are four cargoes working in a similar window.


There are still plenty of cargoes in the natural fixing window and it will be interesting to see if this trend continues into May laycans.


In the Med and Black Sea, we have what feels like an endless list of tonnage ready to fix. Returns on a cross-Med voyage are zero at best.


We are still fixing in the mid WS70s both for Black Sea and Ceyhan loadings, but even though we are seeing a decent amount of cargoes, we don’t expect much to happen with rates, Fearnleys concluded.


Meanwhile, AET and Shell International Trading and Shipping Co (STASCo) have formalised arrangements for the long-term charter of AET's two newbuilding LNG dual-fuelled Aframaxes.


AET's two 113,000 dwt vessels are currently being built by Samsung Heavy Industries and are due for delivery from 3Q18. The contracts will see Shell take both vessels on a long-term charter commencing in the fourth quarter of this year.


Speaking at a ceremony to commemorate the timecharter signing, AET's president and CEO, Capt Rajalingam Subramaniam, said: "As a world leading owner and operator of petroleum vessels, we have a responsibility to embrace the future of sustainable shipping. AET strives to pro-actively adapt and embrace the opportunities that emerge from the industry and global environment.


“Therefore, we took the decision to begin building LNG dual-fuelled Aframax vessels some time ago and these two Aframaxes are amongst the first to take their place in our global fleet. As part of the MISC Group and its sustainability agenda, AET upholds our environmental stewardship by consistently evaluating greener solutions, and our investment in the LNG dual-fuelled Aframax tankers is a further tribute to this.


"Shell is a longstanding and highly valued partner, and we have been working together on these time charter arrangements for quite some time. The fact that Shell has agreed to charter our new ships is a true testament to their commitment to thriving throughout the energy transition and will encourage AET to forge ahead with our commitment to operate a future fleet, where at least half of our ships are fuelled with LNG,"he concluded.


Mark Quartermain, Shell Crude Trading vice president, added: "These two LNG fuelled vessels will help Shell Trading move crude, principally in the Atlantic basin. LNG is a credible marine fuel and will play an important role in our fleet as we introduce cleaner and more efficient vessels. As emissions standards tighten we continue to work with forward thinking companies like AET to support lower emission transportation solutions."


Among the timecharters reported recently on brokers lists is Petroineos concluding a two year deal for the 2003-built VLCC ‘Australis’ for $20,000 per day thought to be for storage duties. Heidmar was believed to have concluded the fixture of the 2016-built ‘RS Tara’ for 12 months option 12 months for $16,000 per day and $20,000 per day for the optional period.


SOLAL was said to have taken the 2009-built Aframax ‘Indescent’ for one year, option one year, at $13,750 per day, while Trafigura was believed to have fixed the 2018-built LR1 ‘Cielo di Rotterdam’ for six,option six months also for $13,750 per day.


In the MR sector, ST Shipping was said to have fixed the 2009-built ‘Atlantic Mirage’ for six, option six months at $13,250 per day, while Clearlake was said to have taken the 2016-built ‘Sadah River’ for 12 months at $15,750 per day and Koch was thought to have concluded the 2015-built ‘Silver Dover’ for six months at $15,000 per day.


Finally, the Handy segment, ENI was believed to have fixed the 2006-built ‘Rinella M’ for nine months at $14,450 per day. 


In the S&P sector, Brokers were still circulating the 1998-built Aframaxes ‘Moscow’ and ‘Moscow Kremlin’ for sale at $14.2 mill each. They are both trading dirty in the South American range.


The only other deal of note was the reported sale of the 2005-built MR ‘Star Express’ to undisclosed interests for a price reported to be in the low $11 mills.


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