Markets-A roller coaster ride

Nov 13 2015

The VLCC market saw dwindling activity last week, as charterers disappeared in an attempt to cool down the recent firming trend.

Hence, fewer official cargoes were quoted and charterers went quietly after tonnage off market to cover their requirements, Fearnleys said in the broker’s weekly report.

However, owners maintained their optimism and enthusiasm, but as the quiet spell dragged on, lower rates were accepted.

By Wednesday of this week, about 110 cargoes had been fixed ex MEG for loading this month and the question on everyone’s lips was - how many uncovered cargoes were left? There was ample tonnage around and continued downward pressure on freight levels was expected.

Less interest from charterers was also seen in West Africa, which also resulted in weaker rate levels.

In the past week, Suezmaxes saw limited activity ex West Africa and rates went sideways. The overhang of tonnage able to fix for third week of November cargoes put downward pressure on rates to around the WS85 level for UK/Cont/Med voyages.

The remainder of the third week is expected to be quiet, and we do not foresee any strengthening of the market again before the second week of December, Fearnleys forecast.

The Black Sea/Med region had enjoyed firm rates, but this region also seemed to have cooled off as November cargoes were basically covered.

In contrast, the North Sea and Baltic areas were very busy last week as cargoes materialised for the third week of this month. Weather delays, resulting in replacements and ullage problems in certain strategic ports on the Continent, led to more challenging tonnage availability in an already active market.

At time of writing (Wednesday), the momentum was still in place and rates were expected to firm. In the Med/Black Sea, a lot more activity was seen this week. This increased cargo activity combined with a lot of tonnage tied up in several key ports helped owners push the market up to WS115-120 levels.

Delays in the Turkish Straits were still quoted as lasting around five days and as a result, we expect the firm trend for Suezmax/Aframax tonnage to continue for the rest of November, Fearnleys concluded.

As can be seen from the third quarter results stories below, most owners and operators are reasonable bullish going forward for all segments of the tanker sector well into next year.

The events on the spot market for large tankers described above are believed to be just a temporary blip, evidenced by charterers continuing to lock in tonnage on long term deals at relatively high levels. This could be construed as hedging against a rising market.

In other charter news, KNOT Offshore Partners (KNOP) has confirmed that Statoil has taken up an option to extend the timecharter on shuttle tanker ‘Bodil Knutsen’.

The extension is for one additional year, to May, 2017, leaving Statoil with two remaining one-year options available, KNOP said.

The vessel was originally fixed in May, 2011, for a period of five years, following her delivery from DSME. Neither the original or extension terms were disclosed.

Croatian tanker owner and operator Tankerska Next Generation (TNG) has signed a 12 month charter for its newbuilding MR ‘Pag’.

‘Pag’ is expected to be delivered next month from SPP Shipbuilding and will be chartered out to an unnamed interest at around $19,300 per day, TNG confirmed. An option was also agreed for an additional six months trading at about $19,500 per day.

Elsewhere, brokers reported that Valero had fixed the 2008-built VLCC ‘Bunga Kasturi Enam’ for two years at $42,500 per day.

Koch was also active entering the market to pick up the 2002-built Suezmax ‘Triathlon’for two years at $35,000 per day and the 2009-built Aframax ‘Raysut’ for 12 months at $28,000 per day.

A couple of LR2s found employment, according to brokers’ reports. Indian refiner Reliance fixed the 2016-built ‘Kleon’ for 12 months, plus a 12 month option period, for $27,750 per day, while Shell reportedly took the 1999-built LR2 ‘Astrea’ for two years at $25,500 per day. 

LR1s also proved popular with Litasco fixing the 2009-built‘Arctic Flounder’for 18 months at $23,000 per day.

In the MR sector, Petrobras was said to have taken the 2007-built sisters ‘Apostolos’ and ‘Atrotos’ for three years at $17,750 per day, while Team Tankers was believed to have taken the 2006-built ‘Ioannis 1’ for 12 months at $19,000 per day and Trafigura was said to have locked in the 2015-built ‘Marlin Ametrine’ for  between three to five years at $17,000 per day.

Reports of orders seemed to have cooled recently but Jiangsu New Hantong Heavy Industry was said to have won an order to build three LR1s for Conti for delivery from the end of 2017.

Rumours were circulating as this news letter went to press that Capital had ordered three Ice Class Aframaxes at Daehan, while another pair of VLGCs were thought ordered by Naftomar at Jiangnan for 2017 deliveries.

In the S&P market, CSSC was believed to have purchased the 1997-built VLCC ‘Cosmic Jewel’ for $30.5 mill. Large tankers of this vintage are either earmarked for storage or for a conversion project.

Remaining with elderly tankers, Arya was thought to have committed the 1994-built Suezmax ‘Al Mubarakh’ for $13.2 mill and Far East buyers were believed to have purchased the 1998-built Suezmax ‘Mindanao’ for $21 mill and unknown interests were said to have bought the 1999-built Aframax ‘Explorer’ for $15.8 mill. 

A couple of Handysize tankers were reported as changing hands. These were the 2002-built ‘Elbtank Denmark’ for $11 mill to undisclosed interests and the 2001-built ‘Frida Maersk’ to Far East-based buyers for $12.4 mill. 

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