The market saw steady demand and fixing, but charterers moved under the radar as best as they could to avoid boosting owners rate ideas, Fearnleys said in its weekly report.
As the week progressed more tonnage appeared, including oil company relets giving the charterers a wider selection of tonnage to choose from.
Overall, the market strengthened a bit ex MEG but was still far from what owners had hoped and expected. With charterers programme ex MEG mainly covered for June, in the short term, the market could go a bit quiet putting pressure on rates, as supply side remains ample and the July programme is still not firmly in sight.
Some demand had been noted in the Atlantic but far from enough to have an overall impact on rates.
The Suezmax market experienced a pre-Posidonia rush last week and the cargo volume in West Africa produced a momentum in owners favour, which forced rates up. The Med/Black Sea market also firmed mainly due to the uncertain situation in the strike hit French ports, but proved short lived, as soon as a solution was in place and congestion was reduced.
At time of writing (Wednesday), natural fixing dates were in the third week window of June. The position list is ample for the few enquiries seen and rates were under downward pressure.
The Aframax market in the North Sea and Baltic established itself at WS100 and WS70 for cargoes being fixed in the second week.
Moving into the third week loading window, we could see rates increase on the back of a busier Baltic programme, Fearnleys said.
In the meantime, while a major part of the shipping community was busy with Posidonia, rates for Med and Black Sea were under downward pressure.
There are still a few ships with uncertain berthing prospects in French Ports affected by the strike.
Despite this, the market looks like it will soften rate wise, as the supply of other available tonnage will create competition giving charterers more tonnage to choose from, Fearnleys concluded.
The big news in the S&P market was Ardmore’s proposed purchase of six Frontline MRs for $172.5 mill.
In connection with the purchase, subject to market conditions, the company plans to offer 7.5 mill of its common shares in an underwritten public offering.
GA Holdings, Ardmore's largest shareholder, has indicated an interest in purchasing approximately 17% of the offered shares at the public offering price.
Ardmore said that it intended to use the net proceeds of the offering to partially fund the proposed acquisition of six modern Eco-design MRs. The company plans on funding the remainder of the purchase price with a new credit facility with an existing lender.
Morgan Stanley, Evercore ISI, Stifel and ABN AMRO will act as joint book-running managers for the public offering. DVB Capital Markets will act as co-manager for the offering.
The vessels, which have average age of 2.4 years, are scheduled to be delivered to Ardmore on charter-free basis between September and October, 2016
In turn, Frontline has bought two Metrostar VLCC newbuildings, plus two options for about $84 mill each for the firm contracts and $85 mill each for the options.
The ‘Crude Hope’ and ‘Crude Horn’ are due to be delivered in September and November this year, respectively, while the options- ‘Crude Med’ and ‘Crude Progress’ - are due to be delivered in January and March 2017, respectively.
Robert Hvide Macleod, Frontline Management CEO, commented: "We have been consistently looking for ways to increase Frontline's exposure to the tanker market as current resale prices do not accurately reflect the earnings power of vessels on the water.
“This acquisition will be accretive in the near term given historically low pricing and the low cash breakeven rates on these vessels and across our fleet. It is also a reflection of our long term market outlook and our focus on generating significant cash flow to provide long term value to our shareholders," he said confirming the deal.
Other newbuildings in the news this week included two Aframaxes at Daehan reported sold to NS Lemos for $46 mill each. They are due for delivery in first quarter and second quarter of 2017, respectively.
Elsewhere, brokers reported the sale of the 2002-built VLCC ‘Nippon’ to Singapore interests, while Greek interests, thought to be Tsakos, reportedly purchased the 2004-built LR1 ‘Simoa’ for $13.9 mill. She was also reported sold in April for $12.9 mill. The 2007-built Aframax ‘Isis’ was also thought sold to Greek interests for $27.5 mill.
BP Shipping’s 2004-built MR ‘British Fidelity’ was reported sold to Sinokor on private terms. She has been renamed ‘ Fidelity’ and chartered to Nanjing Petroleum for 12 months at a rate said to be $16,000 per day.
In the charter market, the 2014-built LR2 ‘Captain John L’ was believed fixed to Navig8 for two years at $23,000 per day, while another LR2, the 2007-built ‘Minerva Indiana’ , was said to have been fixed to ST Shipping for six months at $20,500 per day.
Tune Chemical Tankers was said to have taken the two 2007-built MRs ‘Star Eagle’ and ‘Star Osprey’ for 12 months at $16,500 per day.
Finally, Navig8 was thought to have fixed the 2007-built MR ‘Nave Pulsar’ for 18 months at $15,850 per day and the 2008-built MR ‘Petalouda’ for 12 months at $16,100 per day.