West African Suezmaxes saw continuous activity last week and the pressure told with vessel availability tightening. Charterers were a little slow in circulating end first decade cargoes and as the dates moved on, owners capitalised on firmer rates.
At the time of writing (Wednesday), a replacement fixture was on subs at WS95 for WAfrica/UK-Cont-Med. Owners were looking to achieve the psychological three digits.
Activity also picked up in both the Med and Black Sea including a number of East cargoes managing to attract higher rates. With continuous activity ex North Sea and the second decade in WAfrica showing no signs of slowing down for the remainder of this week, charterers are facing a sustained bullish phase.
The Aframax market in North Sea and Baltic softened further this week after an accumulation of tonnage. The outlook for pre-May Day fixing is looking far from ideal from the owners perspective, as there is too much tonnage in position for the upcoming fixing window, Fearnleys said.
In the Med and Black Sea, the cargo activity was fairly good. The tonnage list looked thinner for prompt days, but as charterers have been, and still are, reaching quite far out, the market could remain stable at around WS105 throughout the week, Fearnleys concluded.
Meanwhile, the OPEC production cuts since the start of 2017 has tightened supplies of medium and heavy sour crudes, leading to a narrowing Brent/Dubai EFS. This has resulted in long-haul crude trades from the Atlantic Basin to the Far East becoming economically viable, Ocean Freight Exchange (OFE) said.
In turn, this resulted in a surge in cargoes from the North Sea, as well as Americas which has boosted tonne/mile demand for VLCCs.
Growing tonne/mile demand has helped to halt declining rates in a sector flooded with newbuilding deliveries in the first quarter of this year. VLCC rates for the benchmark AG/Japan route rebounded from WS46 at the end of March to their current levels of WS65.
Rates for Hound Point/Far East voyage have climbed by $625,000 over the past two weeks to $4.925 mill on the back of tighter tonnage in the region. OFE’s data showed that at least nine VLCCs were carrying crude from the North Sea to Asia in April, with another four VLCCs fixed for May loading thus far.
The Brent/Dubai EFS hit a seven-year low on Monday at $0.57 per barrel, according to Bloomberg, which will continue to encourage more long-haul arbitrage trades. The widening contango in Brent time spreads will also encourage traders to place more barrels into Asia.
Similarly, rates for a Caribs/Singapore trip grew by $300,000 over the last two weeks to $4.3 mill, due to increased movements from the Caribbean, Brazil and the USGC to the East.
The unwinding of onshore storage in the Caribbean, reported by Bloomberg, accounts for the growing outflows to Asia, with at least 10 VLCCs heading from the Caribbean to Far East in April (up 43% month-on-month).
Robust Chinese demand for low sulfur Brazilian crude has led to a surge in Brazilian exports in the first quarter. Brazilian crude exports to China hit 470,000 barrels per day in 1Q17, up by 70% year-on-year.
While the recent rally in VLCC rates seems to have come to an end, increasing tonne/mile demand from such long-haul arbitrage trades should lend some support to rates.
However, whether such opportunistic trades will continue to flourish depends on a potential extension of the OPEC production cuts, as well as crude spreads, OFE concluded.
In the charter market, Concordia Maritime said that it had chartered two IMO II/III MRs. This a joint chartering arrangement with Stena Weco, with Concordia’s share amounts to 50%.
The contract is for one year, and the charters will start in June and July 2017.
“The arrangement is fully in line with our fleet and chartering strategy. We are exploiting our ability to act quickly when the right opportunity arises – this time by taking positions counter-cyclically and further strengthening our position in the MR segment. With access to Stena Weco’s systems and networks, we are convinced that this will be a productive business arrangement,” said CEO Kim Ullman.
Broking sources reported a plethora of fixtures following the holiday break. These included the 2011- built ‘Olympic Leopard’ through taken by Reliance for 12 months at $29,000 per day.
ST Shipping was active, reportedly fixing the Suezmax ‘United Kalavryta’ for six months at $20,500 per day and the MRs ‘Nave Pulsar’ for 18 months at $12,250 per day and the ‘DL Navig8’ for 12 months at 13,500 per day.
In the Aframax segment, Prime reportedly took the LR2 ‘Viktor Bakaev’ for nine months at $18,000 per day, while Vitol fixed the ‘DHT Cathy’ for 12 months at $15,000 per day, Navig8 was said to have fixed the LR2 ‘Captain John’ for 12 months at $16,000 per day, Total was believed to have taken the recently delivered LR2 ‘Seaenvoy’ for 12 months at $15,750 per day and PBF Energy was reported as fixing the ‘Coral Sea’ for six months at $16,500 per day.
Trafigura was thought to have fixed the LR1 ‘Kong Que Zhuo’ for 12 months at $13,250 per day.
In the MR segment there was also plenty of activity with Valero reportedly taking the 2017 built sisters ‘Yasa Seagull’ and ‘Yasa Hawk’ for five years at $15,500 per day each.
Stena Bulk was reportedly active in fixing the ‘Stenaweco Marjorie K’, ‘Stenaweco Julia L’ and the ‘Stenaweco Gladys W’ for 12 months at $13,500 per day each. The latter has since been relet to Clearlake for 12 months at $14,500 per day.
Finally, Koch was thought to have fixed the sister Handysize ‘Gulf Mist’ and ‘Gulf Moon’ for 12 months at $12,500 per day.
Newbuilding orders still appear to be increasing.
For example, Neda Maritime ordered one option one VLCC at Hyundai Samho for 2019 delivery for about $82 mill, while Shandong Landbridge was said to have ordered three VLCCs Dalian for $77.5 mill each.
Other VLCCs were known to be the subject of negotiations, including units for Sentek and H-Line.
Aframaxes also featured with Eastern Pacific ordering two at Hanjin Subic Bay and Metrostar also ordering two at Daehan for a reported $43 mill each.
Greek interests were thought to be behind two MRs contracted at Hyundai Mipo for $32 mill each.
Finally, Thun Tankers, part of the Gothia Tanker Alliance, has ordered four 17,500 dwt IMO II product/chemical tankers at Avic Dingheng Shipbuilding in China.
Furetank Chartering, responsible for the intermediate size segment in the Gothia Tanker Alliance, will commercially manage the vessels.
Furetank, Thun Tankers and Älvtank had previously ordered six 16,300 dwt, LNG fuelled, intermediate tankers at Avic Dingheng.
In the S&P sector, TMS Tankers was believed to have bought the 2010-built LR2 ‘Ratna Shalini’ for $25 mill, while Benetech was said to have purchased the 2005-built MR sisters ‘Oriental Emerald’ and ‘Oriental Ruby’ for $11.25 mill each.
Elsewhere, Great Eastern has agreed to buy a 2008-built MR.
Leaving the fleet were the 1997-built Aframax ‘Astro Arcturus’ for $396 per ldt on the basis of ‘as is’ Singapore with 950 tonnes of fuel ROB and gas free for hot work, plus the 1995-built Aframax ‘Santa Cruz 1’ reported sold to undisclosed interests for $392 per ldt on the basis of ‘as is’ Singapore.