Friday, July 6, 2018

VLCC Markets - Good activity - soft rates

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Activity was reported to be very good during the past week for MEG VLCCs.
However, the tonnage build-up from the week before has resulted in softer rates, Fearnleys reported.
 
To have a similar month volume-wise as June, there should be at least 60 deals left for July. Owners left with ships in position were constantly looking for the one factor to inch the rates up a notch.
 
In contrast, activity in USG/Caribs and West Africa stopped, which does not help the MEG/East market for the time being. Singapore bunker prices have risen and could eventually be the decisive factor of turning rates around in owners’ favour.
 
Suezmaxes experienced a week of healthy cargo activity, especially from the Mediterranean/Black Sea and Americas.
 
However, due to sufficient tonnage availability, rates remained flat.
 
Due to higher bunker prices, we might see higher Worldscale rates, however we expect net earnings to stay at today’s level in the near future, Fearnleys said.
 
In the North Sea and Baltic, the market looked soft going into this week.
 
There was a decent amount of tonnage around, and owners were willing to break WS80 for Baltic loading. This made charterers try to secure low rates, but with over five cargoes working in the North Sea at the same time, owners sensed a re-bounce and stood their ground.
 
It was still tight for North Sea cargoes working in the 10-15 window, but after these have been fixed, we believe the market will stabilise around current levels.
 
In the Mediterranean/Black Sea, it has been busy, especially from the Black Sea, but dates are being worked too far forward, and even with the key port of Trieste working at half capacity, owners are struggling to push rates anywhere.
 
With Libya now struggling again, and Black Sea dates running away from owners, we fear there is a very quiet period going forward in this market, Fearnleys concluded.
 
Illustrating the problems in Libya, the National Oil Corporation (NOC) declared force majeure on crude oil loading at Hariga and Zuetina oil terminals on 2nd July, 2018.
 
This announcement followed the suspension of loading at the Ras Lanuf and Es Sider terminals reported earlier.
 
The force majeure is being imposed in line with the order of the Libyan National Army (LNA) General Command to prohibit ports from receiving allocated shipments.
 
 “Despite our warning of the consequences and attempts to reason with the LNA General Command, two legitimate allocations were blocked from loading at Hariga and Zuetina this weekend. The storage tanks are full and production will now go offline,” NOC Chairman Eng Mustafa Sanalla, said, according to a Reuters report.
 
The oil company said that the total production loss amounted to 850,000 barrels per day of crude, 710 mill standard cu ft per day of natural gas, and more than 20,000 barrels per day of condensate.
 
Elsewhere, Euronav Tankers has acquired the ULCC ‘Seaways Laura Lynn’ from Oceania Tanker Corp, a subsidiary of International Seaways (INSW) for $32.5 mill.
 
The Antwerp-based company has renamed the 2003-built, 441,561 dwt tanker ‘Oceania’ and registered her under the Belgian flag.
 
Euronav already owns the other ULCC still operating, the ‘TI Europe’ (2002 – 442,470 dwt).
 
CEO Paddy Rodgers, said: “Bringing the only other ULCC in the world fleet under our control will provide us with a significant strategic opportunity.”
 
TOP Ships has agreed a sale and leaseback and a five-year timecharter with Cargill International for an MR2 newbuilding.
 
The 50,000 dwt ship (Hull No 8242) is currently under construction at Hyundai Mipo Dockyard in South Korea for January, 2019 delivery.
 
Following the sale, TOP Ships will bareboat charter back the vessel and simultaneously put her on a timecharter with Cargill Ocean Transportation.
 
The company also has continuous options to buy back the vessel during the five year sale and leaseback period at the end of which it has to buy it back.
 
The gross proceeds from the sale are $32.4 mill, which is the total amount that remains to be paid for the vessel. In addition, the revenue backlog expected to be generated by the timecharter is about $27.6 mill.
 
According to a report, tanker asset values look set to climb, as the current culling of the fleets older units will help lead to a finer balance between supply and demand.
 
The decision by OPEC and Saudi Arabia to put more barrels into the market should increase the cargo count in the Arabian Gulf. This will lead to a rosier outlook for the second half of the year than many predicted, VesselsValue claimed.
 
LR1s could see the highest gains, as the run up in demand for distillate flows ahead of the 2020 bunker switch over should benefit large clean product tankers.
 
LR1s are currently seeing depressed asset values, and the expected value on mean reversion alone should benefit owners, VesselsValue added.
 
Brokers reported that Delta Tankers has gone on a buying spree netting five Suezmaxes, including three newbuildings, plus three Aframax newbuildings.
 
Most if not all of the tankers were connected with Toisa, which was allowed by a US bankruptcy court to sell its fleet.
 
Waruna was said to have continued its recent buying spree by acquiring the 2003-built Suezmax ‘Mabrouk’ for $14 mill.
 
A couple of Aframaxes were said to have changed hands. These were the 2003-built ‘Kaluga’ thought sold to Greek interests for $9.5 mill and the 2007-built ‘BM Bonanza’ said to have also been taken by Greek interests for $17 mill.
 
NORDEN was believed to have sold the 2005-built Handysize ‘Nord Farer’ for $11.5 mill to Nigerian interests, while the two years older Handysize ‘Nicos Tomasos’ was said to have gone to undisclosed interests for $8.6 mill.
 
In the MR segment, Greek interests were believed to have purchased the 2010-built ‘Axel’ for $16.6 mill, while Far East buyers were thought to have acquired the 2000-built ‘Ocean Coral’ for $6 mill.
 
Returning to the charter market, among the latest fixtures recorded was the 2018-built VLCC ‘Lita’ said to have been fixed to ExxonMobil for seven years at $31,000 per day.
 
Another VLCC - the 2016-built ‘Atromitos’ - was thought bareboat chartered to AISSOT for five years at $23,500 per day.
 
Petrobras was said to have fixed the LR2 ‘United Grace’ for two years at $15,750 per day, while ST Shipping was believed to have taken the 2009-built MR ‘FPMC 19’ for 12 months at $12,000 per day.
 
In the newbuilding sector, Chinese leasing concern BoComFL has ordered another Suezmax at Hyundai Samho bringing the total up to nine, while Eastern Pacific was said to have contracted two Aframaxes at Hanjin Subic Bay for $43 mill each.
 
Empire Navigation was believed to have signed a letter of intent (LoI) for four, option four, MRs with Hyundai Mipo for about $37 mill each. They will be Tier III compliant and will be built on the back of a long term charter to Cargill.
 
Teekay Offshore Partners was rumoured to have ordered another two 158,000 dwt shuttle tankers at Samsung Heavy Industries.
 
The pair is set for delivery in 2021, according to the data from Asiasis.

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