In Hellenic Shipping News 14/04/2015
The tanker market has been enjoying one of its best periods of the past few years, with 2015 following hot on the heels of a very positive 2014 year, when it comes to time charter earnings, as well as spot market earnings. In its latest weekly report, shipbroker Gibson highlighted the great start of the year for tanker owners, compared to the relative period of 2014, but as we move forward to the second quarter, the shipbroker foresees some interesting developments which could come into play.
According to Gibson, “with the first quarter is now behind us it will be interesting to see what the spring and summer has in store for tankers in what is typically a quieter period in the chartering market. Moreover, we have now entered a period of relative stand-off in the timecharter sector where the charterers feel that terms rates may weaken whilst owners are in no mood to revise their rate ideas in the short term. Taking account of the recent strength in the market owners remain bullish”, said the London-based shipbroker.
It added that “at this time last year the Brent crude was at close to $110 a barrel compared to around $57 today. This massive drop has stimulated a lot of activity in terms of the stockpiling of cheap crude, particularly in China where imports in 2014 were up some 10%. Saudi oil production reached a record high of 10.3 million b/d in March and with higher production also reported for Iraq and Libya and the potential for more Iranian production, the tanker market can indeed continue to be optimistic. Bunker prices have also fallen dramatically over the corresponding period from around $600/tonne down to $320/tonne (basis Fujairah 380cst) which has been highly beneficial for owners/charterers who for the most part have continued operate a conservative policy with regards to steaming speeds”.
Gibson went on to note that “timecharter rates for a modern VLCC today for 12 months are in the region of $40,000/day in our matrix compared to $23,000/day at the same time last year with rates pushed up by the level of enquiry and fixing in the early stages of 2015 in anticipation of a contango play. The Suezmax and Aframax markets have also faired equally well, with 12 month timecharter rates moving up from $18,500 to $32,500/day and from $12,000 to $23,000/day respectively. MR rates by comparison have not fared so well with a 47,000 dwt vessel moving up from $14,700 to just $15,500/day”.
According to the shipbroker, there was yet another contributing factor to the rise of the tanker market. “Another positive, particularly in the crude sector is that tonnage supply is currently under control in the short term. For example, although in the VLCC sector there are 100 units on order, only 19 are scheduled for delivery over the remainder of this year. However 58 deliveries are scheduled for 2016. Similarly, in the Suezmax sector there are 10 conventional units due to deliver over 2015 with another 28 in 2016. The scenario in the clean MR sector (40-55,000 dwt) is somewhat different with 112 due for delivery over the remainder of 2015 and a further 83 in 2016. The dynamics in the crude tanker market next year are likely to change once again. Here, apart from rising deliveries, owners also need to prepare for lower crude flows out of the Middle East Gulf due to refinery developments in the region. At the same time this will lend support to clean tanker earnings owing to further increases in long haul product trade”, Gibson concluded.
Meanwhile, in the tanker markets, in the Middle East, “VLCC Charterers’ previous witholding policy may well have kept the market under control while it lasted, but the longer they held back, the more likely it became that a concentrated, busier patch would develop, and the dam did indeed break after the Easter holidays and the consequent momentum propelled rates to an impressively higher ws 65 to the East and low ws 30s to the West with Owners in the mood to press for more before the April programme is exhausted. No such fun and games for Suezmaxes that had to exist in a much more pedestrian scene. Good availability, and only modest enquiry kept rate within a ws 75/80 bracket to the East and low ws 30s for popular West runs. Aframaxes also suffered from slack demand and ‘easy’ tonnage. 80,000 by ws 105 is now the mark to Singapore, and little early change is anticipated”, Gibson concluded.
