Friday, May 26, 2017

Markets - VLCC earnings further depleted

VLCC E Elephant.

Continued lack of volumes depleted VLCC rates and earnings down to about $15,000 per day.
 
Tonnage was also building up, applying pressure on rates going forward, Fearnleys said. Older and handicapped tonnage, plus newbuildings added to the sentiment, particularly for MEG/East.

Suezmax activity in the first decade of June picked up last week after a prolonged period of stagnation with levels maintained at WS72.5 for TD20.

However, sustained activity in both the North Sea and the Med contributed to a considerably tighter position list, as tonnage was steadily picked off. In addition, at the end of last week, we saw the Med Aframaxes spiking rapidly to levels that made more economic sense for charterers to fix Suezmaxes.

This pressure developed further, which was another contributing factor for owners to renew their resolve, Fearnleys said. On Wednesday, WS85 was paid for WAfrica to UK/Cont/Med.

Both current fundamentals and sentiment point to a firmer few days ahead, which is an unexpected bonus for owners who only a week or so back were contemplating some difficult months ahead.

The North Sea and Baltic Aframaxes finally moved off rock bottom levels this week. This happened as the early June Baltic programmes came out and a couple of prompt replacements were being worked. Rates should move sideways at present levels going forward.

In the Med and Black Sea we saw the market reach new heights. The tonnage list was still looking extremely tight and with several replacements putting even more pressure on the market, we saw WS150 being paid for a cross-Med voyage.

Going forward, we expect the market to slow down, but this will not happen overnight and rates will remain at high levels for the week to come, Fearnleys predicted.

In other chartering news, brokers reported that NORDEN had chartered out the 2013-built ‘Nord Steady’, to Chevron for 12 months at $14,500 per day and had chartered in the 2009-built MR ‘FPMC 19’ for 12 months at $12,000 per day.

In addition, Norient Product Pool, commercially run by NORDEN, has reportedly fixed the 2009-built MR sisters ‘Atlantic Mirage’ and ‘Atlantic Muse’ for 12 months plus six months option at $12,500 per day each.

The 2016-built Aframax ‘North Sea’ was believed to have been fixed by Vitol for six months at $16,000 per day. She was also said to have been taken on a short charter by Clearlake for $15,000 per day.

Another Aframax, the 2003-buikt ‘Astro Saturn’ was believed to have been fixed to  Jellicoe for 12 months at $15,000 per day.

Euronav’s VLCC ‘Anne’ was due to be the first VLCC to load at Corpus Christi at the time this newsletter was distributed.

It was thought that due to draft restrictions, the vessel would only load a part cargo.

DryShips took delivery of the newbuilding Suezmax ‘Saga’ on 19th May in what is effectively an in-house deal.

The vessel was chartered back to the seller and on 24th Ma, 2017, commenced its five year timecharter,r plus optional periods in charterer’s option, at a base rate plu sa profit share. The total expected gross backlog under the timecharter, assuming that the spot market for Suezmaxes for the next five years averages $25,000 per day, is estimated to be around $43.1 mill.

The vessel was acquired from and chartered out to entities affiliated with chairman and CEO, George Economou.

Odfjell has confirmed the purchase of the 2009-buit 33,609 dwt chemical tanker ‘ Argent Eyebright for $25.5 mill. The vessel was built by Kitanihon Shipbuilding in Japan. 

She is fitted with 16 stainless steel tanks and fits well with Odfjell’s fleet of large stainless steel tankers and is in line with the fleet’s renewal strategy, the company said. 

‘Argent Eyebright’ has been on short term timecharter to Odfjell Tankers since January, 2017. She will be renamed and put under NIS flag after closing the transaction at end of June. 

The 19,807 dwt 2010-built chemical tanker ‘Sky Dream’ was also reported sold to Norwegian interests for $18.5 mill.

India Steamship has sold three LR2s to Centrofin in an en bloc deal said to be $63 mill. One vessel is trading in the clean market while the other two are trading dirty.

In the newbuilding sector, Cido was believed to have re-negotiated an order for four PCTCs at Hyundai Mipo, changing the contracts into MRs for 2020 delivery. 

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