Markets - VLCCs experiencing high activity under the radar

Sep 06 2019

Although VLCC activity has appeared slow, there was very high activity under the radar, mostly in the MEG but also in the Atlantic with the exception of USG/East volumes, which were down.

This has brought the monthly count ex MEG to about 100 deals without revealing accurate details of a number of fixtures, Fearnleys reported in its weekly report. 

Over the last week, rates have corrected downwards, at a time where expectations were high. The question is - why work secretively when rates are under downward pressure? The only likely reason is that each rate is slightly down on the previous fixture, the broker said.

However, ships were in abundance, despite the relatively healthy volumes. For now, a bottom has probably been found, but much work remains to turnaround the present trend.

Meanwhile, Suezmaxes in the West lost some of their momentum last week.

West Africa went back down to WS60, and even though there was decent activity, there was still some overhang of tonnage that needed to be cleared for anything to happen.

On a positive note, Suezmaxes in the Med/Black Sea and in the US Gulf have been busy and could possible help owners push the market going into next week. In the East, owners were still waiting for more action. The 30-day tonnage count is now an average, and the market seemed  steady after dropping some points earlier this week.

Aframax rates in the Baltic and North Sea markets started to move upwards this week as enquiries out of Baltic, as well as cross-North Sea picked up substantially.

Going forward, we expect a firmer market as by entering the 3rd decade of September, activity will increase further, and positions were tightening on the back of more ships leaving the area, Fearnleys said.

In the Mediterranean and Black Sea, we have also seen a relatively active week thus far with an upward trend in rate levels.

Voyages ex Black Sea have moved more than 10 WS points since the middle of last week, with current rates standing close to WS100 to the Mediterranean. At the same time a cross-Med voyage lagged behind a little as TD19 traded around WS90 levels.

Owners are now beginning to find this a more attractive market to be in, and we expect their stand on rate levels to be maintained, while the fair amount of unfixed cargoes in the market are concluded, Fearnleys said.

As for the period market, crude rates remained flat this week, while clean rates were stable, Alibra Shipping said. 

However, there was some interest noted in long term LR1 fixtures.

Oil prices fell after last week’s rise to their lowest levels in almost a month on the back of concerns that a global economic slowdown could put pressure on oil demand, Alibra said. 

Brokers reported that one of the Suezmaxes, ‘Marlin Sparta’, bought by Frontline from Trafigura, had been taken on timecharter by Frontline for nine months at $23,000 per day. 

As part of the sale deal, the scrubber-fitted Suezmaxes were timechartered back to Trafigura.

Illustrating the interest in LR1s, the ‘Nave Rigel’ was said to have been taken by undisclosed interests for two, option one year at $17,065 per day.

Odfjell Tankers has taken delivery of the first of four newbuilding stainless steel chemical tankers from Hudong-Zhonghua shipyard.

Delivered on August 26, ’Bow Orion’ is claimed to be the world’s largest in this class of chemical tanker.

She commenced her maiden voyage two days after delivery, sailing for Ulsan, South Korea, to load her first cargo.

The new 49,000 dwt quartet have 33 cargo tanks in duplex stainless steel, a cargo capacity of about 55,000 cu m, and engines that consume 14% less fuel, compared to the older vessels in the fleet, Odfjell claimed.

‘Bow Orion’ and her sistership ‘Bow Olympus’ were named in July of this year, being the first two of the four. Odfjell also has two smaller 38,000 dwt vessels on order at the yard.

Brokers also reported that Onex DMCC had ordered three LR2s at Hyundai Samho for 2021 deliveries. They will be scrubber fitted and cost around $57 mill each.

In addition, two 22,000 dwt dual fuel chemical tankers were reportedly ordered by TB Marine Management at Wuhu Xinlian for $39 mill each.

In the S&P sector, Hunter Tankers, a wholly owned subsidiary of Hunter Group, has agreed a $180 mill sale-and-leaseback transaction with Ship Finance International (SFL), for an initial three VLCCs at what is claimed are highly attractive terms.

Hunter will receive $60 million per vessel net for the sales of ‘Hunter Atla’ (5455), ‘Hunter Saga’ (5456) and ‘Hunter Laga’ (5460), and will subsequently bareboat charter the vessels back for five years. The company will also have purchase options for all three vessels, to ensure maximum flexibility in regards to potential future vessel sales.

Erik Frydendal, CEO of Hunter Group, commented: “This transaction reflects our ongoing efforts to continuously optimise our financing and drive out unnecessary costs wherever possible, while maintaining a high level of flexibility, in order to create value for our shareholders.”


Previous: Markets - Recycling - waiting for a fourth quarter uplift

Next: Sembcorp Marine wins VLCC conversion contract

Jan Feb 2020

Report from our Hamburg forum in October - supporting seafarer performance Will SpaceX''s Starlink prove useful for shipping?