Analysis
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26/4/2012

Fearnleys Weekly: Greeks close to USD 27 mln dry bulk carrier


We register 17 newbuildings worldwide over the past week with main focus on MR tankers and Car carriers. STX received orders for totally six plus six MR tankers from Tanker Pacific of Singapore and the US owner Alterna. These vessels will be built both at the STX Dalian and STX Jinhae yards with delivery 2013 and 2014. STX has so far this year signed contracts for 12 firm MR tankers. Three 6,500 ceu Car carriers were contracted over the last week. Ray Shipping returned to Mipo for ordering one vessel with mid 2013 delivery while Zodiac awarded the Japanese Imabari yard for two vessels with 2014 delivery. We expect new orders for car carriers to grow in the near future.
ACTIVITY LEVEL
Tankers Dry Bulkers Others
Low Low Low
Average Far Eastern Prices
PRICES
PRICES (mill usd) This
week		 Last
week		 Low
2012		 High
2012
VLCC 300'dwt USD 94.0 m USD 94.0 m 94.0 97.0
Suezmax 150'dwt USD 60.0 m USD 60.0 m 60.0 62.0
Aframax 110'dwt USD 50.0 m USD 50.0 m 50.0 52.0
Product 47'dwt USD 34.5 m USD 34.5 m 34.5 36.0
Capesize 180'dwt USD 50.0 m USD 50.0 m 50.0 50.0
Panamax 76'dwt USD 29.0 m USD 29.0 m 29.0 30.0
Handymax 56'dwt USD 27.5 m USD 27.5 m 27.5 28.0
Prices are based on payment terms 40/60
NEWBUILDING CONTRACTS
Type No Size Yard Owner Del Mill$ Comm
BC 5 82000 dwt Oshima NSCSA 2013-14
LPG 2 2700 cbm Foxhall Jaegers Group 2013 18
PCTC 2 6500 ceu Imabari Zodiac 2014
PCTC 1 6500 ceu Hyundai Mipo Ray Shipping 2013
MT 2+2 50000 dwt STX Jinhae Alterna 2013 MR tankers
MT 4+4 50000 dwt STX Dalian Tanker pacific 2014 MR tankers

TANKERS

CHARTERING - Crude
Steady activity was seen in the VLCC market during last week as charterers finally came forward with their 1st decade May requirements. Initially charterers achieved to secure coverage at steady lower numbers while during the last couple of days owners managed to turn the market around in their favour but still some way to go to reach levels we were at only a week. At the present the supply of tonnage seems slim up to middle part May but from then on charterers’ choice are again becoming plentiful. Rates for Suezmax in West Africa took another beating the past week and charterers are presently able to secure tonnage close to ws60. Owners are still trying to show resistance but the market is simply over tonnaged for windows in play. The MED and Black Sea Suezmax market remained slow the last week and rates weakened further. Current rate levels for Aframax in the North Sea remains steady at ws95 with no real potential in sight any time soon. The Baltic market took a beating as non-ice class tonnage entered the scene adding pressure to this market as all relevant ports are getting ice-free. The MED/Black Sea Aframax market enjoyed a spike in rates for month end coverage but is soon expected to soften as we move into the early parts of May with less date sensitivity. Rates for Aframax in Caribs improved marginally and are presently trading at ws95.
CHARTERING - Product
There is still not sufficient activity in the West to clear out excess tonnage from the Continent, hence rates are still at depressed levels. Transatlantic cargoes are still moving at around ws135 for UKC/USAC basis 37kt. Owners are still finding themselves in the rough on the larger vessels with LR1s still fixing at low ws100 for Baltic/USAC basis 60kt with most cargoes shipping into WAFR. Rates are steadily moving along cross-Cont with Handies fixing ws145 basis 30kt and Flexis fixing ws190 basis 22kt. On the back of a very long position list rates ex the USG have taken a hammering with the backhaul market imploding to ws70 basis USG/UKC-Med with exports into South America also under severe pressure. After several active weeks, it now seems like charterers have lost a bit of interest moving cargoes. LR2s are the first ones to see that rates are softening, and last done being paid below previous done. LR1 owners have been good to maintain the rates and are able to maintain the firm momentum. The LR1 position list looks to be in owners favour until mid-May, but LR2 now looks like building up due to lack of cargoes. LR1 owners have been able to conclude business at ws125 basis 55k mt for a voyage from MEG to Japan, while for LR2 owners it now looks like the top is reached at ws97.5 with a softening trend. Rates going west have increased since last week; USD 2.200 and USD 2.550k for LR1/LR2, respectively. MRs in the east maintain rates from previous week, with fixtures being concluded at around ws130 level basis 35k mt for a voyage from MEG to Japan.
ACTIVITY LEVEL
VLCC Suezmax Aframax P. E. of Suez P. W. of Suez
Active Soft Slow Stable Soft
RATES
DIRTY (Spot WS) This
week		 Last
week		 Low
2012		 High
2012
MEG / West VLCC 40.0 40.0 31.0 45.0
MEG / Japan VLCC 59.5 57.5 48.0 70.0
MEG / Singapore 260,000 60.0 60.0 48.0 72.5
WAF / USG 260,000 60.0 60.0 56.5 70.0
WAF / USAC 130,000 64.0 65.0 64.0 92.5
Sidi Kerir / W Me 135,000 65.0 67.5 65.0 110.0
N. Afr / Euromed 80,000 95.0 90.0 80.0 127.5
UK / Cont 80,000 95.0 95.0 85.0 110.0
Caribs / USG 70,000 95.0 95.0 95.0 140.0
CLEAN (Spot WS)
MEG / Japan 75,000 97.5 97.5 82.5 97.5
MEG / Japan 55,000 125.0 125.0 97.5 125.0
MEG / Japan 30,000 130.0 130.0 105.0 130.0
Singapore / Japan 30,000 130.0 130.0 115.0 130.0
Baltic T/A 60,000 100.0 100.0 100.0 135.0
UKC-Med / States 37,000 135.0 132.5 132.5 190.0
Caribs / USNH 38,000 135.0 145.0 120.0 185.0
1 YEAR T/C (usd/day) (theoretical)
VLCC (modern) 21,500 21,500 17,000 22,000
Suezmax (modern) 16,000 16,000 15,000 16,000
Aframax (modern) 13,250 13,250 12,500 13,500
LR2 105,000 13,500 13,500 13,500 13,750
LR1 80,000 12,750 12,750 12,500 13,500
MR 47,000 13,750 13,750 13,500 13,750
VLCCs fixed all areas last week:  59 previous week:  29
VLCCs avail. in MEG next 30 days:  92 last week:  106
(incl. vessels on subjects excl Tankers UK and Frontline)


SALE AND PURCHASE
Vessel Size Built Buyer Price Comm.
Meriom Lily 50 350 2012 US based 29,30
Agistri 9 304 1992 Undisclosed 2,00
Gemini L 7 506 1996 Global Marine 4,50 StSt
Lycian 5 517 2007 Borealis Maritime 8,00 Each Enbloc
Hada 5 543 2008 8,00
Spring Mistral 3 818 2009 South Korean 9,40 StSt

DRY BULK

CHARTERING - Handy
With more cargoes entering the market the numbers of idle ships was quickly reduced and rates peaked rapidly. Skaw-Passero deliveries concluded close to USD 5k for US Gulf direction, while US Gulf positions fixed around USD 19k for trips to Cont. Fronthauls were paid USD 16.5k-17k daily. The Pacific market remained steady with nickel ore and coal enquiries. Indo rounds now fixed at USD 18k basis Singapore delivery. Nickel ore rounds are also getting premium and have seen vessels fixed at USD 12k basis dely North China. WCI & ECI iron ore to China was quiet, however rates from WCI was around USD 12k and from ECI USD 8k. RBCT-India on voyage is around low 20s. Red Sea fertilisers to India fixed in high teens. Short period activity was limited and nothing much seen but ideas were around 12k.
CHARTERING - Panamax
The Panamax market took a good jump this week with rates firming up in both hemispheres. Rumours has it that India increasing coal imports with about 15 million mt and China increasing coal imports due to the biggest price gap in 20 years between domestic and foreign coal. There are increased coal shipments in both hemispheres and the grain season is still fairly active out of ECSA. Typical Tarvs with Continent delivery are now being fixed at around 17/18k. Fronthauls with same delivery are fetching low 20’s while the Pacific rounds are being fixed at low/mid teens. The period market is still somewhat active with takers there for short period around 12k and 1-year at around USD 11k.
CHARTERING - Capesize
The week has been very predictable. Out of West coast Australia, a couple of new cargoes every day fixed at last done levels around USD 7.70. Last done however is USD 7.60 - and one done at USD 8.00 pmt, but for early dates. Saldanha to China has been hovering around USD 14.50 and Tubarao/Qingdao still around the USD 21 mark. It has been done one fixture for 1-year this week at USD 12,000. Time being this is the rate owners are asking for short period, not in line with present FFA values, and consequently lack of period fixtures.
ACTIVITY LEVEL
Capesize Panamax Handysize
Low Firmer Low
RATES
CAPESIZE (usd/day, usd/tonne) This
week		 Last
week		 Low
2012		 High
2012
TCT Cont/Far East (172' dwt) 25,000 24,800 19,500 43,000
Tubarao / R.dam (Iron ore) 8.50 8.40 7.90 12.70
Richards Bay/R.dam 8.30 8.50 8.20 11.00
PANAMAX (usd/day, usd/tonne)
Transatlantic RV 16,300 10,500 4,250 16,300
TCT Cont / F. East 22,500 20,000 13,950 23,900
TCT F. East / Cont 2,900 1,500   2,900
TCT F. East RV 12,300 10,200 4,950 12,300
Murmansk b.13-ARA 15/25,000 sc 10.00 8.45 6.95 10.00
Murmansk b.13-L.pool 15/25,000 sc 10.80 9.30 7.70 10.80
HANDYSIZE (usd/day)
Atlantic RV 11,850 10,300 5,000 15,100
Pacific RV 10,650 10,200 4,180 11,725
TCT Cont / F. East 16,650 14,400 11,500 23,400
1 YEAR T/C (usd/day)
Capesize 150,000 dwt 9,500 9,500 9,500 15,000
Capesize 170,000 dwt 12,000 12,000 11,000 17,000
Panamax 75,000 dwt 11,000 10,800 10,000 12,000
Handysize 53,000 dwt 11,500 11,250 10,000 12,250
Baltic Dry Index (BDI): This Week: 1137 Last Week: 1006


SALE AND PURCHASE
Vessel Size Built Buyer Price Comm.
2 x Jinhaiwan 176 000 2012 Bocimar 37,00 On subs
2 x Jinhaiwan 176 000 2012 Berge Bulk 37,00 On subs
Kohfuksan 172 566 1999 Cyprus Maritime 15,00
SPP H1057 81 000 2012 Greek 27,00 Under negos
Orange Trident 78 932 2007 Cyprus Maritime 24,00
Shining Bliss 76 939 2007 Undisclosed 22,50
Royal Ocean 70 677 1995 Chinese 8,50
Imabari Resale 61 000 2012 Greek 28,00
Yangzhou Dayang Resale 58 000 2012 Greek 26,80
Hiryu 52 982 2003 Greek 17,70
Furness Australia 52 489 2001 Undisclosed 15,00
Daebo Frontier 48 280 1985 Undisclosed 4,70 LDT 8,700
Tarapaca 46 786 2000 Sicuro 13,00
Imabari resale 38 225 2012 European 22,00
Gitta Oldendorff 31 603 2005 Turkish 14,00
SH Bright 29 828 2006 Undisclosed 15,70
Irmgard 37 300 2011 Pacific Basin 22,00

GAS

CHARTERING
At the beginning of last week we finally saw a long sought after recovery in the VLGC market following 3-4 months pretty much at OPEX breakeven levels. A mix of (many) more FOB cargoes in the MEG late April and first half May, quite a few VLGCs tied up awaiting discharge into India and last but not least owners' strong desires and efforts to pull the market up from the misery. The benchmark rate Ras Tanura to Chiba the last 8-9 days' soared from mid/low USD 40's to mid/high USD 50's, and as bunker prices also softened lately, the net TC daily has shot up from USD 11,000/day to more than 25,000/day. There were not an overwhelming number of spot fixtures that drove the market up that fast, however, more than anything else it evidenced what a narrow gap there is between overcapacity and balance in the VLGC market. Pessimists around in the market will now most likely say this is a short-lived rally hardly sustainable, while the opposite camp would say this is only the beginning of a rock solid recovery. We take the view that the market will sustain the improved rates for a good while, but we are rather confident that the pace of the rise in rates will slow down.
ACTIVITY LEVEL
COASTER 15-23,000 cbm 82,000 cbm
Firmer Moderate Active
RATES
SPOT MARKET (usd/month***) This
week		 Last
week		 Low
 High
82.000 cbm / FR 780,000 330,000 185,000 780,000
57.000 cbm / FR 900,000 900,000 725,000 950,000
35.600 cbm / FR 875,000 875,000 750,000 875,000
20.000 cbm / SR* 800,000 790,000 740,000 800,000
10.000 cbm ETH** 610,000 620,000 580,000 620,000
6.500 cbm / SR 490,000 490,000 470,000 520,000
COASTER Europe 345,000 325,000 245,000 345,000
COASTER Asia 237,500 237,500 235,000 240,000
* 20,000 cbm s/r reflects average spot market, LPG and Petchems (segment 15,000 / 23,000 cbm)
** 10,000 cbm eth reflects average spot market, Petchems and LPG (segment 8,200 / 12,500 cbm)
*** Excl. waiting time, if any


LNG
SPOT MARKET (usd/day) This
week		 Last
week		 Low
 High
East of Suez 138-145'cbm 117,000 114,000 105,000 150,000
West of Suez 138-145'cbm 122,000 119,000 110,000 150,000
1 yr TC 138-145'cbm 155,000 155,000 148,000 158,000


LPG/FOB prices (usd/tonne) Propane Butane ISO
FOB North Sea / ANSI 968.50 989.00  
Saudi Arabia / CP 990.00 995.00  
MT Belvieu (US Gulf) 620.51 864.55 943.99
Sonatrach : Bethioua 955.00 1005.00

Source: Fearnleys

Analysis

Bulker demolition has surged in recent years as the market has weakened. While scrapping volumes are still significantly lower than deliveries, the rise in recycling has nonetheless slowed fleet growth somewhat.
The freight rate war currently taking place between Asia and Europe, and between Asia and the US, and the further addition of new ships, will force carriers to resort to more slow steaming.
In recessions shipping sentiment can sometimes have a slightly schizophrenic feel. The more demolition mantra crops up again and again at conferences, which is fair enough. But it makes a strange bedfellow for the buy low sell high brigade who are desperately searching for cheap ships...

By Mike Corkhill

Last Summer, chemical tanker operators were looking forward to seeing a glimpse of light at the end of what promised to be quite a long tunnel. The majority agreed that the market rebound was still two years off and that the return to a balanced fleet, respectable freight rates and profitable operations was on the cards for 2014. The hatches would have to remain battened down until then.
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