Friday, September 16, 2016

Markets - VLCC rates softer to the West- firmer to the East

Image Courtesy: Tanker Investments (Voss Spirit)

The VLCC market ex MEG saw steady demand during the latter part of last week, but the lukewarm sentiment did not carry over into this week.
Rates remained stable, but corrected half a point down in the early part of this week for MEG/West, while MEG/East saw an increase of one to two points, Fearnleys reported.

The overhang of tonnage decreased and bad weather in the Far East may further delay a few vessels. However, there was still enough tonnage to cover charterers expected demand.

The Atlantic Basin also saw more of the same with steady activity and charterers managed to maintain recent levels except for WAfrica, where demand on fairly prompt dates brought levels up to WS42.5-45 level for the WAfrica/East run.

Suezmaxes in West Africa remained more or less unchanged last week with the exception of some prompt replacement deals that paid up. At time of writing (Wednesday), the tonnage list has seemingly become tighter, due to steady activity in all areas, combined with the paper trading up for October dates.

On the back of the above, owners bullish sentiment grew and expectations are for higher rates for the first decade of October fixing schedule.

The Med Suezmax players have already seen the effect of less available tonnage on the back of ships being sent east and recent deals from Black Sea and Ceyhan have paid some WS5 – 7.5 points above previous deals.

In the North Sea and Baltic areas, rates have settled since last week’s sudden hike. However, there seems to be a lot of different opinions whether or not this market still has the potential to firm even further.

For the time being, we believe it will continue sideways, Fearnleys said.

Last week’s momentum in the Med and Black Sea continued throughout this week. More cargo activity was seen than expected. A busy CPC programme and cross-med activity pushed rates above WS90.

Owners were bullish for the week to come and were still holding out for higher rates, the broker concluded.

Elsewhere, Gener8 Maritime took delivery of two ECO VLCCs, the ‘Gener8 Perseus’ on 9th September, 2016 and the ‘Gener8 Oceanus’ three days later from Hyundai Heavy Industries and Hyundai Samho Heavy Industries, respectively.

The two VLCCs represent the 14th and 15th of 21 VLCCs due to be delivered into Gener8 Maritime's fleet.  

Upon delivery, both vessels entered Navig8 Group's VL8 Pool.

Meanwhile, Ardmore Shipping Corpo has taken delivery of the first three of six MRs that it agreed to acquire in June, 2016.

The ‘Ardmore Endurance’, ‘Ardmore Explorer’ and ‘Ardmore Engineer’ are 49,500 dwt Eco-design IMO II/III MRs built by STX Offshore and Shipbuilding in 2013, 2014 and 2014, respectively.

The vessels were delivered on 31st August, 7th September and 12th September, 2016, respectively, and are currently employed in the spot market.

Ardmore also announced that it has completed debt financing for the acquisition of the six vessels. Four of the vessels are being financed through a new $71.3 mill senior debt facility with ABN AMRO. The facility is an amortising senior term loan with a final maturity date in 2023. The covenants and other conditions are consistent with those of the company's existing credit facilities, it said.

The remaining two vessels have been added to the existing credit facility with ABN AMRO and DVB Bank, which was completed in January, 2016. The facility has been increased by $36.6 mill, and NIBC Bank has agreed to join ABN AMRO and DVB Bank as lenders under the facility.

The increase comes in two tranches to coincide with the delivery of the two vessels, and they will mature in 2023.

In another move, Ardmore announced that it has agreed to sell the 2005-built, 29,000 dwt Eco-mod product/chemical tanker ‘Ardmore Centurion’ for $15.7 mill. The vessel is expected to be delivered to her new owner in late September, 2016.

Anthony Gurnee, Ardmore’s CEO, commented: "We are pleased to welcome these high-quality, modern MR product/chemical tankers to Ardmore's operating fleet. Alongside the three additional vessels that are scheduled to deliver to Ardmore in the coming weeks, these recent acquisitions will expand our long-term earnings power, enhance our cost efficiency and lower our breakeven costs. We also appreciate the support of ABN AMRO, DVB Bank, and NIBC Bank in providing bank financing for all of our newly acquired vessels."

Stena Bulk and Golden Ari Resources have taken delivery on a joint basis of the eighth IMOIIMAX type MR - ‘Stena Immortal’ - from Guangzhou Shipbuilding International (GSI).

The Gothenburg-based owner placed an order for 13 IMOIIMAX product tankers in 2012.

‘Stena Immortal’ will be operated by Stena Weco and will become a unit of the company’s global logistics system, which employs around 60 vessels.

The remaining five vessels will be delivered every third month with the last vessel one in 2018. Three of the 13 IMOIIMAX tankers are wholly owned by Stena Bulk, six together with GAR, two by Stena Bulk’s sister company Concordia Maritime and two by Stena Weco.

In the charter market, broking sources reported that Scorpio had fixed the 2013-built Aframax ‘Densa Alligator’ for six option six months at $18,000 and $21,500 per day for the optional period, while Litasco was believed to have taken the 2016-built Aframax ‘STI Grace’ for six months at $18,500 per day.

KNOT Offshore Partners has confirmed that Statoil has declared the last two optional years of the ‘Bodil Knutsen’s’ timecharter on the same terms as the existing contract. The firm contract period is thus extended from May, 2017 to May, 2019

In addition, KNOP has granted Statoil new five one-year options.

A few newbuildings were reported, including Sun Enterprises opting for a VLCC at JMU and two, option two Aframaxes from Hyundai for $47 mill each. The Aframaxes were thought to be at the LOI stage.

Eastern Pacific was also said to have invested $86 mill on two Aframaxes at HHI Subic, plus two options. 

Navig8 was believed to be at the LOI stage for two, plus options for two, plus two, plus two MRs at Hyundai Mipo for $36 mill each. They were said to be IMO II types and are to be fitted with 18 tanks each.

Kumiai Senpaku was reported to have ordered at 37,000 dwt asphalt carrier at Chengxi for 2018 delivery. 

The 2007-built Aframax ‘Isis’ was reported sold to Atlas Marine for $24 mill. Included in the deal was a two year charter to Phillips 66 at $19,000 per day.

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