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Tanker Market Report
23 February 2007 -
Zero-tolerance after 2010?
Of the 161 remaining single hull VLCC still trading, 138 of these units made at least one AG-Far East voyage during 2006. Perhaps this is not a startling a statistic given that this is now the main trading route for these vessels. What is frequently asked of us as brokers is what will the position be in the run up to 2010 and beyond? The orderbook shows that newbuildings now outstrip the phase-out tonnage in every tanker sector with the exception of the 10-25,000 DWT range. Analysis of the fleet shows that the Japanese fleet presently own 26 single hull VLCCs with 29 double hull replacements on order, similarly Middle East based owners have more new orders than single hull tankers with 39 orders and the only 21 vessels requiring replacement. China has a long term ambition to transport their imports and exports in all shipping sectors on Chinese owned tonnage and these intentions can clearly be seen from the chart below. What is perhaps a little surprising is the shortfall in replacement tonnage owned by non-Greek European owners - 12 units, and the Greeks who show a shortfall of 8 units. It is these last two groups which, in normal circumstances, would be expected to provide the time charter tonnage to the market.
Several of the single hulls still trading have already been designated for projects outside of the tanker market. However, with 31 units to be delivered this year followed by 40 in 2008 and 59 in 2009, there will some serious thinking by owners about the right time to scrap. With the orderbook now outstripping the phase-out it is only a matter of time before the first VLCC demolition sale is reported ahead of any depreciation in scrap values. For European owners it is still an attractive proposition to order more tonnage given the anticipated increase in world oil demand and the shortfall still to be filled in Far Eastern requirements through time charters (see below). Undoubtedly more VLCC’s will be ordered in the coming months from the new emerging yards in China and Vietnam providing competitive deliveries. It is for all of these reasons that so few single hull VLCCs will be afloat after 2010.
Crude
The exceptional coincidence of several holidays early this week meant that all markets got off to a slow start. This was particularly so in the Middle East Gulf VLCC sector. However a flurry of mid week fixing resulted in a healthy total of 40 fixtures. The plentiful supply of single hulled units continued to depress rates and WS 47.5 was very much the norm for eastern options although by the close levels had nudged back into the low WS 50’s. The scarcity of double hulls eventually impacted on rates which now stand at WS 55 to the US Gulf, a move of 7.5 points over the week, and WS 75 East. We estimate that 40 single hulls but no more than 24 double hulls can load within the next 30 days which certainly indicates a need for caution by Charterers. Thin Aframax trading saw rates slip to around WS 120 for modern vessel to the East.
West African enquiry was very scarce and although last done was WS 127.5 for 130,000 tonnes to the US Gulf this rate would be around WS 120 today. Million barrel tonnage is plentiful for the last decade of March but any further erosion of rates will be limited by conversely tight VLCC availability. Last done on a VLCC to the US Gulf was at WS 77.5 but this level would be well into the WS 80’s today.
A good supply of early March tonnage in the Caribbean caused rates to drift down to around WS 220 for 70,000 upcoast movements and further softening is expected.
A week in which limited North Sea activity caused a build up of tonnage and an inevitable drop in rates with cross-North Sea levels slipping from circa WS 185 to today’s level of WS 150 for 80,000. The Baltic ice class rates held some strength for a little longer but eventually succumbed to a fleshed out list not aided by a Mediterranean market struggling to avoid entering double-figures; and subsequently dropped from WS 190 levels to WS 150 for 100,000 tonne liftings.
A very dull start to the week allowed Mediterranean aframax rates to drift from the WS 117.5 level to a low WS 97.5 for a straight cross-Mediterranean. Charterers took this opportunity to fix outstanding business but a lot more will need to be done before rates are able to climb out of the abyss.
Suezmaxes have not fared much better but at least kept a pretty constant level of WS 115 for cross-Mediterranean voyages with Black Sea loaders commanding a small premium. Availability of tonnage suggests little will change in the short term.
Products
In the Western hemisphere the Continent still draws the markets attention being the strongest area of activity. By contrast the Eastern markets have struggled and only marginally saved by a late rally at the end of the week absorbing some of the prompter vessels.
With Chinese New Year rendering Singapore shut on Monday and Tuesday, the market was as expected very quiet with the latter part of the week constituting the majority of the activity. LR2's have come to life with a glut of ships going on subjects, AG/Japan is at 75 x WS 130-135 with a handful of ships on subjects at these levels, if they get fixed then the remaining tonnage will be looking to take advantage and push the market to a minimum of 75 x WS 140. The LR1 market has also tightened during the week, with rates being pushed to 55 x 175 for AG/Japan. Tonnage for mid March onwards is looking contracted, which will put further pressure on the market, if enquiry levels persist. Continent runs are rated at USD 2.0 million.
The MR market is still displaying its two tier characteristics. Approved units AG/East Africa continue to talk 35 x WS 235-240 levels, with the unapproved units rated at 35 x 200-210. AG/Japan is rated at 35 x WS 220-225, with tonnage available. The UK-Continent runs have not been as prolific as past weeks; a MR run is going at USD 1.6 million. A lot of short haul activity is occurring, which is causing tightness on the prompt position, but these ships will be available off the 5-10 window in March. Enquiry levels are healthy, but we are yet to see the long haul runs.
With the New Year activities, Asia has been dormant. There has been a clearance of the prompt ships in Singapore, which has caused the Market to eventually show signs life. Singapore/Japan is rated at 30 x 200.
A very steady week, as far as rates are concerned, in North West Europe. Fixing commenced with levels of WS 295 being paid on prompt position, rates softened slightly on the 5-10 window. There was a noticeable lack in movements to West Africa from the continent, although modern approved tonnage is demanding WS 325 plus basis 33kt. Cross-Continent movements including export liftings from the Baltic also stood strong, WS 240 basis 30kt, being the number that Owners were after, dependant on age and position. Current freight levels for LR's 60 at 200 plus going transatlantic or West Africa.
Increased activity in the Black Sea and Eastern Mediterranean area has finally seen the freight level escalate. 30,000 tonnes now stands at WS 280 for movements in to the Mediterranean with inter-Mediterranean movements only marginally lower at WS 265. Some interest in moving trans-Atlantic cargoes of UMS with 33.000 commanding WS 330 and the larger sizes 37,000 managed to obtain WS 290. A few questions for cargoes moving to West Africa or the Middle East with UMS but very little were achieved on these options. Naptha cargoes in the Mediterranean saw 30,000 tonne at WS 275 and WS 285 from the Black Sea with one fixture agreeing to go to Singapore at USD 1.7 million. Interest in this direction still remains firm.
The upcoast market in the Caribbean appears to have levelled out around WS 260 on a lifting of 38,000 tonnes despite delays still being present in the US Atlantic Basin. Charterers have been looking at several other discharge options including East Coast Canada, South America and US West Coast all being explored. It seems as though any excess tonnage that is around on prompt dates are being booked for the time being. In similar fashion to last week, with rates still high on the Continent, several owners have been looking for backhaul cargoes or opting to ballast back for now.
Whilst every care has been taken in preparing this report and all information supplied is believed to be correct we cannot be held responsible for any errors or omissions and accept no liability whatsoever for any loss or damage incurred in any way whatsoever by any person relying on this information contained therein.
推荐海运精英论坛www.ffachina.com/bbs
23 February 2007 -
Zero-tolerance after 2010?
Of the 161 remaining single hull VLCC still trading, 138 of these units made at least one AG-Far East voyage during 2006. Perhaps this is not a startling a statistic given that this is now the main trading route for these vessels. What is frequently asked of us as brokers is what will the position be in the run up to 2010 and beyond? The orderbook shows that newbuildings now outstrip the phase-out tonnage in every tanker sector with the exception of the 10-25,000 DWT range. Analysis of the fleet shows that the Japanese fleet presently own 26 single hull VLCCs with 29 double hull replacements on order, similarly Middle East based owners have more new orders than single hull tankers with 39 orders and the only 21 vessels requiring replacement. China has a long term ambition to transport their imports and exports in all shipping sectors on Chinese owned tonnage and these intentions can clearly be seen from the chart below. What is perhaps a little surprising is the shortfall in replacement tonnage owned by non-Greek European owners - 12 units, and the Greeks who show a shortfall of 8 units. It is these last two groups which, in normal circumstances, would be expected to provide the time charter tonnage to the market.
Several of the single hulls still trading have already been designated for projects outside of the tanker market. However, with 31 units to be delivered this year followed by 40 in 2008 and 59 in 2009, there will some serious thinking by owners about the right time to scrap. With the orderbook now outstripping the phase-out it is only a matter of time before the first VLCC demolition sale is reported ahead of any depreciation in scrap values. For European owners it is still an attractive proposition to order more tonnage given the anticipated increase in world oil demand and the shortfall still to be filled in Far Eastern requirements through time charters (see below). Undoubtedly more VLCC’s will be ordered in the coming months from the new emerging yards in China and Vietnam providing competitive deliveries. It is for all of these reasons that so few single hull VLCCs will be afloat after 2010.
Crude
The exceptional coincidence of several holidays early this week meant that all markets got off to a slow start. This was particularly so in the Middle East Gulf VLCC sector. However a flurry of mid week fixing resulted in a healthy total of 40 fixtures. The plentiful supply of single hulled units continued to depress rates and WS 47.5 was very much the norm for eastern options although by the close levels had nudged back into the low WS 50’s. The scarcity of double hulls eventually impacted on rates which now stand at WS 55 to the US Gulf, a move of 7.5 points over the week, and WS 75 East. We estimate that 40 single hulls but no more than 24 double hulls can load within the next 30 days which certainly indicates a need for caution by Charterers. Thin Aframax trading saw rates slip to around WS 120 for modern vessel to the East.
West African enquiry was very scarce and although last done was WS 127.5 for 130,000 tonnes to the US Gulf this rate would be around WS 120 today. Million barrel tonnage is plentiful for the last decade of March but any further erosion of rates will be limited by conversely tight VLCC availability. Last done on a VLCC to the US Gulf was at WS 77.5 but this level would be well into the WS 80’s today.
A good supply of early March tonnage in the Caribbean caused rates to drift down to around WS 220 for 70,000 upcoast movements and further softening is expected.
A week in which limited North Sea activity caused a build up of tonnage and an inevitable drop in rates with cross-North Sea levels slipping from circa WS 185 to today’s level of WS 150 for 80,000. The Baltic ice class rates held some strength for a little longer but eventually succumbed to a fleshed out list not aided by a Mediterranean market struggling to avoid entering double-figures; and subsequently dropped from WS 190 levels to WS 150 for 100,000 tonne liftings.
A very dull start to the week allowed Mediterranean aframax rates to drift from the WS 117.5 level to a low WS 97.5 for a straight cross-Mediterranean. Charterers took this opportunity to fix outstanding business but a lot more will need to be done before rates are able to climb out of the abyss.
Suezmaxes have not fared much better but at least kept a pretty constant level of WS 115 for cross-Mediterranean voyages with Black Sea loaders commanding a small premium. Availability of tonnage suggests little will change in the short term.
Products
In the Western hemisphere the Continent still draws the markets attention being the strongest area of activity. By contrast the Eastern markets have struggled and only marginally saved by a late rally at the end of the week absorbing some of the prompter vessels.
With Chinese New Year rendering Singapore shut on Monday and Tuesday, the market was as expected very quiet with the latter part of the week constituting the majority of the activity. LR2's have come to life with a glut of ships going on subjects, AG/Japan is at 75 x WS 130-135 with a handful of ships on subjects at these levels, if they get fixed then the remaining tonnage will be looking to take advantage and push the market to a minimum of 75 x WS 140. The LR1 market has also tightened during the week, with rates being pushed to 55 x 175 for AG/Japan. Tonnage for mid March onwards is looking contracted, which will put further pressure on the market, if enquiry levels persist. Continent runs are rated at USD 2.0 million.
The MR market is still displaying its two tier characteristics. Approved units AG/East Africa continue to talk 35 x WS 235-240 levels, with the unapproved units rated at 35 x 200-210. AG/Japan is rated at 35 x WS 220-225, with tonnage available. The UK-Continent runs have not been as prolific as past weeks; a MR run is going at USD 1.6 million. A lot of short haul activity is occurring, which is causing tightness on the prompt position, but these ships will be available off the 5-10 window in March. Enquiry levels are healthy, but we are yet to see the long haul runs.
With the New Year activities, Asia has been dormant. There has been a clearance of the prompt ships in Singapore, which has caused the Market to eventually show signs life. Singapore/Japan is rated at 30 x 200.
A very steady week, as far as rates are concerned, in North West Europe. Fixing commenced with levels of WS 295 being paid on prompt position, rates softened slightly on the 5-10 window. There was a noticeable lack in movements to West Africa from the continent, although modern approved tonnage is demanding WS 325 plus basis 33kt. Cross-Continent movements including export liftings from the Baltic also stood strong, WS 240 basis 30kt, being the number that Owners were after, dependant on age and position. Current freight levels for LR's 60 at 200 plus going transatlantic or West Africa.
Increased activity in the Black Sea and Eastern Mediterranean area has finally seen the freight level escalate. 30,000 tonnes now stands at WS 280 for movements in to the Mediterranean with inter-Mediterranean movements only marginally lower at WS 265. Some interest in moving trans-Atlantic cargoes of UMS with 33.000 commanding WS 330 and the larger sizes 37,000 managed to obtain WS 290. A few questions for cargoes moving to West Africa or the Middle East with UMS but very little were achieved on these options. Naptha cargoes in the Mediterranean saw 30,000 tonne at WS 275 and WS 285 from the Black Sea with one fixture agreeing to go to Singapore at USD 1.7 million. Interest in this direction still remains firm.
The upcoast market in the Caribbean appears to have levelled out around WS 260 on a lifting of 38,000 tonnes despite delays still being present in the US Atlantic Basin. Charterers have been looking at several other discharge options including East Coast Canada, South America and US West Coast all being explored. It seems as though any excess tonnage that is around on prompt dates are being booked for the time being. In similar fashion to last week, with rates still high on the Continent, several owners have been looking for backhaul cargoes or opting to ballast back for now.
Whilst every care has been taken in preparing this report and all information supplied is believed to be correct we cannot be held responsible for any errors or omissions and accept no liability whatsoever for any loss or damage incurred in any way whatsoever by any person relying on this information contained therein.
推荐海运精英论坛www.ffachina.com/bbs
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