Friday, April 8, 2016

Markets - VLCC rates ease following a spike

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The VLCC market took most players by surprise, as a massive rise and fall was seen over the last seven days. 
Rates rapidly increased during the latter part of last week to very healthy levels reaching WS95 for a MEG/South Korea voyage, Fearnleys said in its weekly report.

Then it all came to a halt and subsequently eased off in very light trading. The main reason for the increase was the fear of a limited supply, as several charterers entered the market at the same time.

When they all had covered their cargoes, the position list became fairly balanced and with limited demand, rates eased off again with no signs of any turnaround soon.

Suezmax rates in West Africa were mainly supported by strong sentiment in the East last week and rates more or less remained unchanged.

However, at time of writing (Wednesday) activity and rates in the East was on a downward spiral with the mood also spreading to the Western hemisphere.

In the Med/Black Sea, rates for Suezmaxes also remained stable until now. We are also now seeing a weaker sentiment arising from the ashes after the dust has settled from a hyped market in the East.

The North Sea and Baltic Aframax markets both softened after another short-lived spike. This occurred after a few quiet days at the end of last week, with a combination of vessels being declared short and coming back into position.

On the other hand, the outlook for the third week is looking brighter as the Baltic April crude programme is the busiest in a long time. Med and Black Sea took a big hit this week with rates plummeting from WS115 ex-Med last week, to WS75 this week.

The number of prompt ships is staggering and Turkish strait delays are down to two to three days. As a result, charterers’ seized the window of opportunity and pushed out cargoes left, right, and centre.

Unfortunately, for the owners, it will take some time and a lot of cargoes to tighten the position list and eventually the rate levels, Fearnleys concluded.

Reports were also circulating of severe bottlenecks at the BOT loading facility and the Chinese discharge terminal at Qingdao, which could affect the market going forward.

The latter was reportedly caused by an increase in Chinese ‘teapot’ refineries import programmes.

In other chartering news, ST Shipping was believed to have fixed the 2001-built VLCC ‘Sea Horizon’ for two years at $40,000 per day, while Shell reportedly extended the two LR3s ‘SKS Saluda’ and SKS Spey’ for 12 months at $26,500 per day each, slightly down on the original rate of $27,500 and $28,500 per day, respectively. 

Shell also booked two Handysize tankers -’Acamar’ and ‘Adara’-  owned by France’s Socatra on 12 month timecharters period charters for $16,750 daily, according to brokers’ reports.

At least four Aframaxes were said to have been fixed for between one and two years at rates varying between $23,000 and $26,250 per day. The LR1 ‘Jag Aanchai was also said to have been taken by CCI for 12 months at $19,750 per day.

In the S&P market, brokers reported that the LR1 sisters ‘Navig8 Precision’ and ‘Navig8 Prestige’ both due to be delivered this year, were sold to banking interests for $48 mill each in a deal, which included a bareboat charter back to Navig8 for seven years with a purchase option kicking in after three years.

In addition, Navig8 Chemical Tankers was reported to have agreed a sale and leaseback agreement with China’s Bank of Communications Financial Leasing (BCFL) for four 49,000 dwt MRs under construction at STX Offshore & Shipbuilding.

The four MRs are due for delivery from the end of March to end of June next year.

Reports suggest that under the agreement, BCFL will provide funding for pre-delivery, as well as the delivery instalments for the vessels. The net proceeds from the transaction were said to be $140,025,600.

Navig8 Chemical was thought to have signed 10-year bareboat charters with purchase options with BCFL.

According to local reports, the Bangladesh Government is to build two Aframaxes in China for $100 mill in total. They will be procured on government-to-government (G2G) basis and will be delivered in the next two years.  

Bangladesh Shipping Corp (BSC) and China Petroleum Technology and Development Corp (CPTDC) reportedly signed a memorandum of understanding (MoU) on Thursday.

The 2004-built Handysize ‘Simoa’ was said to have been committed to unknown interests for $13.9 mill, while another Handy - the 2004-built ‘Amalienborg’ was believed sold to Chinese interests for $16 mill, which included a five year timecharter at $14,000 per day.

In the newbuilding sector, K Line was said to have ordered two Aframaxes at Kawasaki for 2018/19 deliveries, while according to local reports, the Bangladesh Government is to order two Aframaxes in China for $100 mill in total.

They will be procured on government-to-government (G2G) basis and will be delivered in the next two years.  

Bangladesh Shipping Corp (BSC) and China Petroleum Technology and Development Corp (CPTDC) reportedly signed a memorandum of understanding (MoU) on Thursday.

JACCAR was believed to have declared options for three more 85,000 cu m VLECs for $130 mill each at Dalian on the back of 10-year charters to Oriental Energy.

Meanwhile, the sixth IMOIIMAX chemical and product tanker was recently delivered from the Chinese shipyard CSSC Offshore & Marine Engineering in Guangzhou.

‘Stena Weco Impulse’, which is jointly owned on a 50:50 basis by Stena Bulk and the Danish Weco Group is the sixth in a series of 13 vessels ordered by Stena Bulk.

She is now en route to several Indonesian ports where she will load vegetable oils after which she will sail to Barcelona and Rotterdam to discharge her cargo. The naming ceremony will take place in Copenhagen in June, 2016.

All 13 IMOIIMAX tankers will sail in Stena Weco’s global logistics pool, which currently employs more than 60 vessels.

“We are very pleased with this addition to our IMOIIMAX fleet. The ‘Stena Weco Impulse’ is the first of two vessels, which we will jointly own with the Weco Group, and this will strengthen still further our very successful collaboration,”said Erik HÃ¥nell, president and CEO Stena Bulk/CEO Stena Weco.

“Together with Stena Bulk, we have built up a fleet of more than 60 vessels, all of which sail in our advanced logistic system. The fact that we are now focusing on joint ownership is yet another step towards more far-reaching collaboration,” said Johan Wedell Wedellsborg, chairman Weco Group.

The first five IMOIIMAX tankers were delivered by January of this year. Delivery of the remaining eight vessels will be completed by the end of 2017. In addition, there is an option on a further two vessels.

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