November’s VLCC Meg programme was concluded last week with some 132 cargoes fixed, volumes not seen since January.
We are currently between months and as usual activity is a bit subdued, Fearnleys said in its weekly report.
A couple of December deals were done, but basically BOT cargoes and rates were concluded at last done levels.
Saudi stem-confirmations could possibly be out by the end of this week.
WAfrica/East activity was also a bit slower, but owners were resilient
and rates remained stable, as optimism was still in place for the
winter.
Suezmaxes experienced steadily eroding rates over the past week, with
WAfrica slipping from the low WS80’s down to WS72.5 for TD20. End
November cargoes were thin on the ground and other areas remained quiet
allowing tonnage to build up.
Owners earnings were further eaten into by increasingly expensive
bunkers adding to the pain. The earnings are now below the $10,000 per
day threshold.
Thus far, the Turkish Straits delays have been unseasonably minimal,
although this is expected to change in the weeks ahead of the winter
months.
There is a glimmer of hope in the Med and Black Sea, where there was a
sudden flurry of action with Aframaxes and lists tightened. This was the
trigger a year ago for Suezmaxes and owners will be watching with keen
interest for any opportunity to capitalise.
The week ahead has a softer feel but this could turn around on
increased volume or weather delays. Norwegian meteorologists are
guessing that there will be a warm start to this winter season, and
North Sea and Baltic Aframax markets should be moving sideways heading
towards December.
The fact that there is a five- day maintenance period coming up at Primorsk undermines the ’bold’ statement above.
The Med and Black Sea softened last week and has remained rather flat
ever since. However, it is looking to firm up next week again, as
tonnage is quickly being picked up for early 1st decade, leaving the
cross-Med cargoes with fewer options going forward, Fearnleys concluded.
Crude tanker freight rates are expected to decline further next year,
following a sharp decline in 2017, according to the latest edition of
the Tanker Forecaster, published by shipping consultancy Drewry.
Although crude tonnage supply growth is expected to be low next year
after surging in 2017, this will not be enough to push tonnage
utilisation rates higher, as demand growth is expected to be sluggish. A
slowdown in global oil demand growth and a likely decline in China’s
stocking activity will keep growth in the crude oil trade moderate next
year.
After a sharp decline in 2016, freight rates in the crude tanker market
have declined further this year, despite strong tonnage demand growth
in the two years, thanks to a surge in tonnage supply.
Fleet growth is expected to come down to 3.2% in 2018, after increasing
by close to 6% per year in 2016 and 2017. However, this is unlikely to
provide any respite to owners, as rates will continue to decline in 2018
on account of a slowdown in crude oil trade growth. Global oil demand
growth is expected to fall to 1.4 mill per day in 2018 from 1.6 mill per
day in 2017, Drewry said.
In addition, a likely slowdown in China’s stocking activity poses a big
risk to crude tonnage demand. This activity, which remained one of the
leading factors behind the strong growth in the crude oil trade over the
last two years, may fall significantly in 2018.
According to the IEA’s data on China’s implied stock changes, the
country should have accumulated close to 520 mill barrels since 2015,
well above the total special petroleum reserve (SPR) capacity that was
supposed to come online fully by 2020.
A sharp decline in stocking activity in the third quarter of this year
to 0.5 mill barrels per day from 1.2 mill barrels per day in the second
quarter suggests that we might see a significant decrease in the
inventory build-up by China in 2018, Drewry concluded.
In the products trades, Asia’s front-month regrade (a measure of jet
fuel’s relative strength to gasoil) recently eased from last Thursday’s
19-month high of $1.58 per barrel but remained relatively strong at
$1.32 per barrel, Ocean Freight Exchange (OFE) reported.
While the surge in the Asian regrade can be partly attributed to
seasonality during the winter heating oil demand season, the bulk of
support is coming from the ongoing slump in the gasoil market.
Regional refineries have been running hard on the back of robust
refinery margins, as well as the end of turnaround season, flooding the
market with excess supplies. Unusually high diesel exports from India,
despite the end of monsoon season, have added length to an
already-pressured market, OFE said.
The jump in Indian gasoil exports can be attributed to Indian Oil’s
300,000 barrels per day Paradip refinery running at full capacity, as
well as the ramp-up of BPCL’s 310,000 Kochi refinery and HMEL’s 230,000
barrels per day Bathinda refinery after recent expansions.
Sentiment in the Asian high sulfur gasoil market weakened further after
the release of a new batch of Chinese export quotas, as well as China’s
domestic ban on diesel with sulfur content greater than 10 ppm, which
are likely to result in higher exports of high sulfur diesel.
The increase in cargo demand is reflected in the firm North Asian MR
segment. Rates for a South Korea/Singapore trip basis 40,000 are
currently assessed at $460,000, some 13% higher than at the start of the
month.
An increasingly narrow gasoil EFS and relatively high freight rates
have closed the arbitrage window to Europe, leaving Singapore as one of
the few viable outlets for excess barrels.
As such, onshore middle distillate inventories in Singapore stood at
11.55 mill barrels for the week ending November 9, up by 9.7%
month-on-month, OFE concluded.
Elsewhere, TEN has taken delivery of the Ice Class Aframax ‘Bergen TS’,
the last in the 15-vessel pre-employed newbuilding programme.
The ship was built by Daewoo-Mangalia and started a long-term charter immediately after its delivery.
The fleet expansion resulted in a 30% increase of TEN’s fleet over the last 18 months.
The first ship from the tranche, the 300,000 dwt VLCC ‘Ulysses’ was
delivered in May, 2016. She was followed by nine Aframaxes, two LR1s, a
DP2 Shuttle tanker, another VLCC and an LNGC.
With 65 vessels fully operational, TEN’s minimum revenue backlog comes
to 1.3 bill with average contract duration of 2.5 years, the company
claimed.
“With the largest growth in the company’s history, successfully and
timely completed, TEN is well positioned to take advantage of market
opportunities as they will appear,” Nikolas Tsakos, TEN President &
CEO, said. “The fully employed renewal programme is expected to
significantly contribute to TEN’s bottom line and solidify the fleet’s
income visibility and cash generation from now and into the future.”
In the charter market, the 2012-built VLCC ‘Trikwong Venture’ was
believed fixed to Koch for $27,500 per day, while the 2012-built Suezmax
‘Decathlon’ was taken by Total for 12 months at $19,000 per day.
In the Aframax sector, the 2006/07-built ‘NS Captain’ and ‘NS Columbus’
were thought fixed to Clearlake for 12, option 12 months at $15,500 per
day each. Vitol was said to have taken their near sister, the
2003-built ‘Petrozavodsk’ for six months at a similar rate. PBF Energy
was said to have taken the 1998-built ‘Eagle Austin’ for 12 months at
$15,000 per day and the 2004-built sisters, ‘Adafura’ and ‘Ashahda’ were
reportedly fixed to undisclosed interests for $14,500 per day each.
The recently delivered LR1 ‘Cielo Blanco’ was reported as fixed to
Trafigura for six, option six months at $13,750 per day, while Navig8
was believed to have taken the 2004-built ‘Theodosia’ for 12, option 12
months at $11,750 per day.
In the MR sector, Golden Stena Weco was thought to have fixed the
2017-built ‘Altair’ for two years at $15,000 per day, while Chevron was
said to have taken the 2009-built sisters ‘Nave Orbit’ and ‘Nave
Equator’ for 12, option 12 months at $13,500 per day.
ST Shipping was very active.This charterer was believed to have fixed
the 2005-built MR ‘Kriti Emerald’ for 12 months at $16,000 per day, the
2004-built ‘Jasmine Express’ for 12 months at $12,750 per day, plus the
2008-built Handysize ‘Hector N’ for 12 months for $12,000 per day.
In the S&P market, brokers said that the 2003-built Aframax
‘Singapore Voyager’ had been committed to Greek interests for $9 mill,
while Indian buyers were said to have committed $9.8 mill for the
1998-built Suezmax ‘Cap Georges’.
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