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Tanker Market - Weekly Report
The spot TCE earnings of TD3 (AG/ Japan) softened by 14% through the week, bringing the average TCE earnings to approximately USD 13,000/day. TCE earnings of TD4 (Wafr / USG) was also slightly weakened leading to an average TCE of USD 24,500/day. The VLCC activity was still limited after the holiday seasons. S-Oil was rumoured to have received some 20 offers for their CVs market quote with period ranging from 1 to 5 years. However, nothing has been concluded yet. We have seen some potential interests willing to invest in the VLCC segment, however firm chartering enquiries are yet to be located. Period rates for 1 year and 3 year time charter remain to be around USD 19,500 / day and USD 22,500 / day.
Maersk Broker's illustrative spot and period rates basis 18th January 2013 (USD/day):
Spot (Baltic/UK/Cont) 1 year 3 years 5 years 12,500 12,250 13,000 13,750
Change +/0 0 0 0
5 Year High
5 Year Low
12,250 13,250 14,000
0 0 0
25,000 23,000 22,000
9,000 11,000 13,000
Spot TCE earnings of TD5 (WAF / USAC) dropped from USD 14,000 / day in the beginning of the week and flattened to mid USD 12,000/day, which leads the average TCE to USD 13,000/day. Spot TCE earning of TD6 (Bsea/Med) reduced by almost 50% during the week, resulting in an average TCE earnings of USD 7,500/day No fresh period activity was reported this week. Suezmax demand remains weak as long as West African barrels are moving at below USD 15,000/day level on TCE basis. We have not seen many winter caused delays on the Black Sea trade which are expected in the near future. In general period activity remains limited with one year time charter rate averaging around USD 16,000/day for regular trading (i.e. nonstorage or ice).
Spot TC2 (Cont/USAC) 1 year 3 years 5 years 17,500 13,750 14,250 14,750 (5,000) 250 250 250 12,500 14,500 15,250 0 0 0 15,000 15,750 0 0 28,000 26,000 24,000 10,500 12,500 13,500
Spot TC5 (AG/Japan) 1 year 3 years 5 years 8,000 13,500 14,250 15,000 (4,000) (250) 0 0 13,500 14,500 15,500 0 0 0 15,000 16,000 0 0 35,000 30,000 25,000 12,000 13,000 15,000
Spot TC1 (AG/Japan) 1 year 3 years 5 years 6,500 14,000 14,750 16,250 (3,500) 0 0 0 13,000 15,750 16,750 0 0 0 16,500 17,250 0 0 42,000 35,000 32,000 12,500 14,250 16,000
Spot TCE earnings of TD9 (CBS/USG) continued to be low this week, with an average TCE of USD 4,500/day. Although spot rate on TD17 (Baltic / Cont) flattened during the week, the TCE earnings on this route still performed better than other routes. Average TCE earning on TD17 was USD 14,000/day, while average TCE earnings on TD19 resulted in USD 4,000/day. On the period front it was reported that a US based major chartered in a wide beam Aframax for 12+12 months at USD 12,500/day + USD 14,500/day but it has not been confirmed as of time of writing. That fixture, if indeed concluded, would set a new low for wide beam Aframaxes that have been earning a premium on period basis over standard 105,000 dwt units. Charterers who took ice class Aframaxes before the winter are still to see winter profits although ice is expected to thicken in Northern Europe in the coming weeks.
Spot TD7 (NSea/Cont) 1 year 3 years 5 years 7,000 12,750 14,500 16,250 (1,500) (250) 0 0 12,500 16,000 17,000 0 0 0 17,500 19,000 0 0 42,000 35,000 32,000 12,000 14,500 16,500
Spot TD5 (WAF/USAC) 1 year 3 years 5 years 12,500 16,250 19,500 22,000 (4,000) 0 0 0 16,000 20,000 22,500 0 0 0 20,500 23,000 0 0 57,000 45,000 37,000 14,500 17,000 21,500
LR2 / LR1
Spot earnings for LR2s on TC1 (ME Gulf/Japan) softened throughout the week with TCE earnings averaging about USD 7,500/day, compared to USD 10,500/day previous week. Spot earnings for LR1s on TC5 (ME Gulf/Japan) also softened, averaging USD 9,000/day throughout the week, compared to USD 12,500/day last week. On the period side, M/T "LARVIK" (68,900 dwt, built 2006 / SUMITOMO) was reported fixed to BP for 12 months at USD 13,750/day. We are hearing there was no optional year in the deal reported last week, where Jo Tanker's owned LR1 N/B M/T "TBN" (74,445 dwt, built 2013 ex STX) was confirmed fixed for 12+12 months at around USD 14,300/day for the firm period. Although the spot market on the main routes has been softening during the last 14 days, this does not seem have influenced Charterers' interest in modern LR1 tonnage for both mid and long-term period with options which remains elevated compared to recent history. Several ships are currently being discussed on a firm basis and we expect a few clean fixtures to emerge out of these in the coming weeks.
Spot TD3 (AG/Japan) 1 year 3 years 5 years 11,500 19,500 22,500 27,500 (2,000) 500 0 0 20,000 25,000 29,000 0 0 0 25,000 29,000 0 0 86,000 73,000 55,000 15,000 22,000 28,500
Notes: 1) Handysize rates are estimated basis MIPO 37 IMO III type tonnage 2) MR rates are estimated basis MIPO 46 IMO III type tonnage 3) All rates are basis modern (1-5 year old) tonnage 4) All rates are basis firm periods 5) All rates are basis average speed and consumption figures
Baltic Daily Forward Assessment (BFA)
Baltic Forward Assessment
TD3 (VLCC) TD5 (Suezmax) TD7 (Aframax) TC5 (LR1) TC2 (MR) TC4 (Handysize)
Jan 10 Jan 17 Jan 10 Jan 17 Jan 10 Jan 17 Jan 10 Jan 17 Jan 10 Jan 17 Jan 10 Jan 17
MR / Handysize
The TC2 (Continent/USAC) softened throughout the week with round trip earnings averaging around USD 18,000/day, compared to USD 22,000/day last week. Earnings in the Caribbean market TC3 (Caribs/USAC) firmed slightly, averaging USD 12,000/day in TCE earnings, compared to USD 10,500/day previous week. TC14 (US Gulf to Continent) also firmed, averaging USD 6,000/day throughout the week, compared to (negative) USD 1,000/day previous week. On the period side, M/T "HIGH SEAS" (51,678 dwt, built 2012 / HM) reportedly extended to BP for 12 months at USD 13,500/day. Confirmation of the M/T "NORTHERN LIGHT" (50,900 dwt, built 2006 / STX / ICE 1A) being fixed to Clearlake in December for 12 months at USD 15,000/day emerged in the market. M/T "MR KENTARUS" (ex FR8 FORTITUDE) (46,763 dwt, built 2007 / Sundong) was reportedly fixed for 12 months at low USD 14,000s/day to Cargill with delivery ex DD in China. M/T “HISTRIA IVORY” (40,450 DWT, built 2006 / Constanta) was reportedly extended to Repsol for 12 months at USD 12,700/day. It has been another active week within the MR segment with a number of ships being traded firm, predominately for short-term period. We expect to see continued interest from Charterers for modern tonnage in the West, especially if the spot market on the Continent remains strong. There has been limited period activity in the handy segment, with many Owners currently being reluctant to commit for period at current levels being in the low USD 12,000s/day for one year.
12.395 12.158 14.028 13.723 6.616 6.439 31.076 31.393 26.039 26.310 19.548 19.550
12.078 11.853 13.871 13.227 6.607 6.451 28.491 29.078 22.982 23.258 19.190 19.191
11.359 11.148 13.098 12.518 6.414 6.346 28.697 28.953 19.859 19.538 18.016 18.016
10.539 10.388 12.525 12.010 6.227 6.177 30.338 30.549 18.286 18.208 18.948 18.950
12.281 12.054 13.297 13.186 6.631 6.565 31.000 31.509 19.994 19.787 19.658 19.660
12.449 12.419 13.567 13.626 6.548 6.740 31.471 31.612 19.664 19.892 19.330 19.473
Cal 14 Cal 15
12.490 12.479 13.526 13.586 6.600 6.607 31.786 31.804 19.654 19.897 19.497 19.640 12.531 12.551 13.568 13.603 6.655 6.642 31.858 31.877 19.727 19.971 19.531 19.673
Note: All rates are in USD / metric tonne
11 Jan – 18 Jan 2013
Sale & Purchase
Having had a fairly active week, there are a number of sales to report in the crude and product segment: 1990s built and more modern tonnage has been sold in both segments. In the product segment Trafigura have been widely reported as buyers of the M/T “MERIOM GLORY”, IRIS and TOPAZ (50,050 dwt, 2008/08/09 ex GSI). These vessels have been in the market for sale for a long time and whilst reports vary, the price is believed to have been around USD 70 mill. en bloc. Towards the end of the week it was also reported that the zinc coated handy M/T “SHOKO MARU” (30,050, 1998 ex Minami Nippon) was sold to Middle Eastern Buyers for USD 8.8 mill. The crude segment yet again saw sales in the Aframax and VLCC sectors. Russians Rosneft are thought to have picked up another VLCC with the purchase of the M/T “MERIDIAN LION” (273,000, 1997 exHyundai) for USD 26.5 mill. The Japanese M/T “IKOMASAN” (300,000, 2000 ex Mitsui) has once again been reported to have gone for mid USD 27 mill., however this is as of yet not confirmed. Furthermore, Bakri Navigation were reported to have snapped up the M/T “FORWARD PIONEER” (107,000 dwt, 2005 ex Koyo) for USD 19.7 mill.
A relatively quiet week for the newbuilding segment. We were reminded this week of a second deal secured by Hyundai Vinashin recently. Top Tankers are reported to have contracted 1+1 MR product tankers for USD 29.5 mill. This is hot on the heels of Wilmars order for 2+2 MRs reported in December at a price of USD 31 mill. The reason for the price difference is not currently clear, but most likely reflecting a difference in specification perhaps with one price including BWTS amongst other upgrades and the other not. Deliveries of all these ships ordered are expected within 2014, and we would not be suprised to see more orders surface at this facility as 2014 slots at all the main Korean MR yards are becoming fewer and further between. Pricing from the main stream MR builders in Korea is edging up as a result and we can quickly see two-tier pricing emerging with lower prices and earlier deliveries being offered from 2nd tier MR builders. In general we also see increased activity and interest in LR tonnage and, as previously predicted, anticipate order flow in these segments to increase (from basically zero) in the months ahead.
Representative Second Hand Prices - 5 yrs old (USD Million)
VLCC 58 Suezmax 40 Aframax 28 LR1 27 MR 24 Handysize 21 VLCC 89
Representative Newbuilding Prices (USD)*
Suezmax 56 Aframax 46 LR1 38 MR 33 Handysize 30
Price Development Since Last Week
Price Development Since Last Week
Source: Maersk Broker
*based on Korean tonnage *based on Korean yards
Source: Maersk Broker
Economic Developments and Drivers
The World Bank has cut its forecast for global economic growth in 2013, as austerity measures and high unemployment in developed nations weigh on economies. The World Bank now sees the global economy growing 2.4% this year, down from its June-forecast of 3.0% growth. US growth is lowered by 0.5%-points, while the forecast for Japanese growth is halved. The Euro-area is expected to remain in recession. The Chinese economy grew at a faster pace in the fourth quarter, the first acceleration in two years. GDP grew by 7.9%, up from 7.4% in the third quarter, thereby ending a streak of seven consecutive quarters of slowing growth. In the full year 2012, the Chinese economy expanded by 7.8%, the lowest annual growth rate since 1999. Chinese house prices rose in the most cities since April 2011 in December. Prices for new houses rose in 54 of the 70 cities tracked by the government, up from 53 in the previous month. Prices fell in eight cities. China’s inbound foreign direct investment (FDI) declined in 2012 due to a slowdown in economic growth and as manufacturers relocated to markets with cheaper labour. FDI dropped 3.7% to USD 111.7 bill., the first annual decline since 2009. Euro-zone industrial production fell in November 2012, as sharp declines in southern Europe offset increases in Germany. Factory output dropped 0.3% m-o-m, a third consecutive fall. Italy and Spain suffered the sharpest contraction in production, as output fell 1% and 2.5% respectively. Output in Germany rose by 0.1% m-om. Inflation in the Euro-zone in December 2012 remained above the European Central Bank’s target , despite a drop in energy prices. Consumer prices rose by 0.4% m-om and were up by 2.2% in the 12 months to the end of December, above the official inflation target of slightly below 2%. Excluding volatile items such as food and energy, the annualised core rate of inflation picked up to 1.5% from 1.4% in November. Retail sales in the US rose more than expected in December last year, providing support for the economy. Sales increased 0.5% m-o-m after rising 0.4% in November. For the whole of 2012, sales rose 5.2%. Industrial production in the US rose in December 2012, suggesting the manufacturing sector continues to expand at a moderate pace. Manufacturing production increased 0.8% m-o-m in December, after gaining 1.3% in November. US housing starts jumped in December to a four-year high, making 2012 the best year for the industry since 2008. Housing starts climbed 12.1% to an annual rate of 954,000 units. In the full year construction began on 780,000 homes, up from 608,000 in 2011 and the most since 2008. Consumer prices in the US were unchanged in December last year, following a 0.3% m-o-m drop in November. The cost of living rose 1.7% in the full year 2012, compared to a 3% increase in 2011. Japan’s machinery orders rose more than expected in November 2012. Orders climbed 3.9% m-o-m, rising for a second consecutive month, in a sign that companies may gradually increase capital spending. Large orders can cause volatile results. Core orders, which exclude those for ships and electric power utilities, increased 0.3% y-o-y in November. India’s inflation slowed to the lowest level in almost a year in December, increasing chances for a reduction in interest rates. The wholesale price-index rose 7.18% year-on-year in December, down from 7.24% in November. India’s exports declined for an eighth consecutive month, as exports contracted by 1.9% y-o-y in December 2012. Imports grew by 6.2% y-o-y. The trade deficit widened in December to USD 17.6 bill. For the period April-December this fiscal year, shipments have shrunk by 5.5% compared to the same period last year. The International Energy Agency (IEA) has raised its forecast for oil demand in 2013, citing stronger than expected demand in China, the US and Brazil. The IEA estimates demand grew by 975,000 barrels per day in 2012, up from a previous estimate of 850,000 barrels per day. In 2013, demand is expected to increase by 930,000 barrels per day, up from the previous estimate of 865,000 barrels per day. The Seaway crude oil pipeline, connecting the storage hub in Cushing, Oklahoma, and the US Gulf Coast, has been expanded from a capacity of 150,000 barrels per day to 400,000 barrels per day. The expansion aims at easing the bottleneck in Cushing. Chinese refineries increased throughput to a record high in December, as new refining capacity was opened and as economic activity experienced the first acceleration in two years. Crude throughput rose 8.4% year-on-year to 43.1 mill. metric tonnes, equivalent to 10.2 mill. barrels per day. European car sales fell by the most in 19 years in 2012. Sales in the European Union plus Iceland, Norway and Switzerland declined 7.8% to 12.5 mill. units in the full year. In December, new registrations dropped 16% year-on-year to 840,000 units.
This report is based on our knowledge of relevant market conditions. Our estimates are made on the basis of this knowledge, but other circumstances, or new circumstances, as well as general uncertainty could cause the market to develop differently. We take general reservation for misprints. © All rights reserved. No part of this publication may be reproduced in any material form (including photocopying or storing it in any medium by electronic means) without the written permission of the copyright owner. Likewise, any quoting is prohibited without the written permission of the copyright owner.
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