06 August 2017

Markets - Lacklustre market continues

Another week of a lack of VLCC cargoes, resulted in the tonnage list becoming longer than seen for some time.

As a result, the competition for cargoes has intensified and the downward pressure increased. Rates softened both in the MEG and in West Africa.

Earnings approached $10,000 per day but we may be near the bottom for now, Fearnleys said in its weekly report.

Suezmaxes have again experienced a testing week with very limited action in the West to whet appetites. Available positions in West Africa for end 2nd decade in August tightened up slightly on the back of the high volume of fixing East of Suez and TD20 climbed to the WS67.5 level, where it hovered into the early part of this week.

The Med and Black sea markets were seasonally quiet with refinery demand down. TD6 is currently steady at WS75 but there is an expected increased in volume due in the coming weeks, which could stimulate some momentum.

There are 13 newbuild Suezmaxes due to be delivered during the balance of August through to September, which will only add to owners’ challenges for the next few weeks.

The North Sea and Baltic markets extended its seasonal trail along the bottom of the market for another week. The fact that the majority of Litasco Murmansk cargoes were fixed on Suezmaxes has not helped and we expect the market to stay at present levels for at least one more week, Fearnleys said.

Cargo activity has been fairly high in the Med and Black Sea this week. Levels have nonetheless remained the same, apart from the occasional prompt replacement or the lucrative long voyage. The volumes were not good enough to push the rates up on a more permanent basis.

As a result, we expect the market to continue in the same fashion as the previous weeks.

In the demolition market, the upward trend continued this week with some spectacularly priced deals being concluded by cash buyers and willing recyclers, GMS said.

The ongoing shortage of tonnage that is increasingly coming up against a firming demand is likely a large part of the reason that the industry has witnessed a flurry of excellently priced deals last week.

Rising local steel plate prices seen was not entirely expected. However, following the onset of this years monsoon rains that have engulfed much of the Indian sub-continent and subsequently resulted in a shortage of local product being available to the domestic steel mills, has driven prices for ships upward.

The principally buoyant Bangladeshi market was still enjoying the positive fallout from the reversal of the budget some weeks ago. Buying has ramped back into gear after a tentative and idle last few months, GMS said

This week, the industry also welcomed the news out of India, where the GMB (Gujarat Maritime Board) issued an ultimatum to the Alang yards still to modernise and improve their facilities under the guidelines laid out in the Hong Kong Convention (HKC) for ship-recycling.

This is certainly a bold and forward thinking manoeuvre by the Indian government that should be applauded, as it seeks to raise local standards after the great strides that have already been made over the past few years, with over 38 local yards already bearing HKC class approvals from the likes of NK, Rina and IRS.

In Pakistan, there was a lot of confusion as Prime Minister Nawaz Sharif was forced to resign following a decision by the country’s Supreme Court, reportedly due to corruption charges. However, in times of turmoil, commodity markets often push on and at present Pakistan seem no different, GMS concluded.

In the demolition sector, brokers reported that the 1994-built Aframax ‘Impros’ had been taken by Bangladeshi interests for $367 per ldt on the basis of ‘as is’ Fujairah with a minimum amount of bunkers and gas free.

In addition, Bangladeshi breakers reportedly tokk the 1992-built MR ‘Sanmar Serenade’ for $382 per ldt on the basis of ‘as is’ Colombo with 200 tonnes of bunkers ROB.

Gener8 said it had agreed to dispose of two 1999-built Suezmaxes and one 2002-built Aframax for breaking prior to their special surveys.

In its earnings presentation, Gener8 said that it ha sold one 2002-built Aframax in May, 2017, and one 2002 built Suezmax tanker in June, 2017 for aggregate net proceeds of $3.9 mill after prepaying $19.2 mill in associated debt, and the release of the working capital from the Navig8 pools.

The company also agreed to sell two 2016-built VLCCs for aggregate gross proceeds of $162 mill and expected net cash proceeds of $61.5 mill, after prepayment of associated debt and the release of working capital from the Navig8 pool.

Brokers reported the sale of the 2002-built VLCC ‘Tsurusaki’ to Nathalin for around $22 mill and the MR ‘Tamarin’ built 2008 for $17 mill to Union Maritime.

d’Amico Tankers recently signed a memorandum of agreement and bareboat charter contract for the sale and leaseback of the MR ‘High Discovery’, built in 2014 by Hyundai Mipo, for $28 mill.

TEN has announced the delivery of the Aframax ‘Stavanger TS’, the eighth in a series of nine tankers built against long-term employment to a major European oil concern, believed to be Statoil and one of the four with ice class specifications.

The last remaining ship to complete the 15-vessel organic growth programme,‘Bergen TS’ is scheduled to be delivered in the third quarter of this year.

MRs are in vogue for those seeking newbuildings. For example, DSD reportedly ordered two, plus two optional MRs at Hyundai Mipo for $32 mill each and for 2019 deliveries.

Oceangold reportedly contracted four MRs at STX for $35 mill each also for 2019 deliveries, while Italian interests were reported to have ordered two MRs at GSL for $34 mill each, also for 2019 deliveries.

Meanwhile on Thursday of this week, TORM signed an agreement to purchase two high-specification MR resale vessels. They are currently under construction at Hyundai Mipo and will be delivered to TORM later this quarter.

TORM already has 12 Hyundai Mipo vessels in its fleet and has good technical and commercial experience with these vessels, the company said.

During the 3Q17, TORM has bought six MRs for 185 mill and has further newbuilding options for 10 product tankers.

In addition, Vitol has ordered two 84,000 cu m VLGCs at Hyundai with options for a further six.

In the charter market, brokers reported that Clearlake had fixed the 2014-built MR ‘Green Hellas’ for three to six months at $14,250, while Trafigura was said to have taken the 2005-built MR ‘Kriti Amber’ for three months at $13,000 per day.

Source: 04 August 2017

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