Markets - VLCCs barely covering OPEX

Apr 26 2019

The VLCC resurgence in recent weeks turned out to be short lived.

After last week’s chartering frenzy, with rates improving by the fixture, the market took a turn for the worse again this week.

Oil company relets were also marketed en masse, adding to an already populated position list, Fearnleys reported.

On Tuesday, MEG/China was logged at WS42.5, yielding a daily return in the low teens, and barely covering OPEX. A further downward risk is evident short term.

The Atlantic market fared slightly better, as owner were reluctant to commit to longer employment at current levels.

Suezmax owners managed to keep some momentum going in a firmer market leading into the Easter holidays, as charterers rushed to cover stems before the impending prolonged break,

TD20 briefly saw returns close to $18,000 per day. However, inevitably tonnage again built as the market stopped for a few days, thus the early part of this week saw rates eroding again.

We are around the corner from a predicted impending market recovery at the back end of June and surely this is the last chance for charterers to gain control in a downward direction for a while, the shipbroker said.

Elsewhere, Aframaxes trading in the North Sea and Baltic enjoyed a pre-Easter fixing rush.

On the back of this activity, coupled with some injection stems ex Baltic, rates improved by about WS10 points overall.

After the Easter break, the market turned quiet again.

In the short term, rates will at best move sideways. However, we expect activity to pick up again moving into the next fixing window and we could see a firmer market.

The Mediterranean and Black Sea market moved sideways during the past week, as several offices were closed for the Easter holidays.

TD19 (Cross-Med) hovered around WS77.5 to WS80 levels.

Charterers’ activity peaked at the beginning of this week, but although cargoes were entering the market, owners’ optimism was short lived, as there were still enough prompts ships around to take the steam out of the situation.

Charterers will still enjoy the luxury of seeing several prompt ships available for cross Med voyages in the week to come and we expect rate levels to remain stable, Fearnleys concluded. 

In other news, Klaveness Combination Carriers has reportedly signed a Contract of Affreightment (COA) for its new combination carriers - CLEANBUs.

The deal was said to have been signed between the Klaveness subsidiary and an undisclosed Australian importer and distributor of clean petroleum products (CPP). The COA covers multiple cargoes over a period of up to 12 months with commencement in the second quarter 2019.

Klaveness took delivery of the first of six CLEANBUs, the 83,600 dwt ’Baru’, from New Yangzi Shipyard in China in January, 2019. The remaining vessels are all due to delivered by October, 2020.

Brokers reported that the 2002-built Suezmax ‘Triathlon’ had been fixed to BP for 12 months at $20,000 per day, while several MRs were reported fixed for varying periods of between six months and two years at rates of between $13,000 and $15,750 per day. 

In the newbuilding sector, Mitsui OSK Lines (MOL) took delivery of the VLCC ‘Phoenix Jamnagar’ on 24th April.

Built by Japan Marine United Corp (JMU), the 311,798 dwt vessel will be managed by MOL’s Singapore-based subsidiary, Phoenix Tankers.

The JMU designed MalaccaMax tanker will be primarily employed to ship crude to India under a long-term contract between Phoenix and Reliance Industries.

Brokers also reported that Sun Enterprises had ordered two MRs at Hyundai Mipo for $37.5 mill each for delivery next year.

In the S&P market, NGM Energy was active, reportedly taking the 2006-built VLCC ’Nerissa’ for $31 mill and the two 2001-built Suezmaxes ‘DS Melody’ and ‘DS Symphony’ at an undisclosed level.

Finally, the 2004-built Aframax ‘Camelia’ was said to have been bought by Soechi for $14.3 mill.


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