Braemar Seascope. Market Indicator

Transcription

1 Weekly Chartering Report Thursday, 5 January 212 Braemar Seascope ket Indicator Wet 4-Jan-12 Avg Avg YTD 211 Avg TC E ( U S $ / D a y ) TC E ( U S $ / D a y ) TC E ( U S $ / D a y ) TC E ( U S $ / D a y ) 26, NHC AG/EAST TD3-1, 12, 1,5 8, 13, NHC WAFR/USAC TD5 12, 15, 12, 11,5 8, NHC UK/CONT TD7 9,5 18,5 1,5 12, 55, CLN AG/JAPAN TC5-4,5 3, -3,5 5,5 37, CLN CONT/USAC TC2 12,5 15,5 14, 11,5 38, CLN CARIB/USAC TC3 15, 12,5 15, 1,5 Dry 4-Jan-12 Avg Avg YTD 211 Avg BDI 1,552 1,869 1,588 1,549 BCI 2,768 3,516 2,862 2,237 BPI 1,599 1,721 1,69 1,749 BSI 1,14 1,235 1,149 1,377 Container 2-Jan-12 Avg Avg YTD 211 Avg B O X i Financial 4-Jan-12 Avg Avg YTD 211 Avg BRENT CRUDE US$/bbl IFO 38 ROTT US$/mt YEN/US$ WON/US$ 1,151 1,147 1,148 1,17 US$/EURO US$/STERLING GOLD /US$ 1,611 1,661 1,68 1,573 All details given in good faith but without guarantee Deep Sea Tankers +44 () Dry Cargo Chartering +44 () Container Chartering +44 ()

2 Jan Jan US$/day US$/day Crude Chartering 5/1/212 VLCC Review As we close the book on 211, shipowners will have to admit that it has been one of the worst years in recent history. Our figures are only really a yard-stick, but for roundtrip TD3 this year the Timecharter Equivalent earnings come out at US$8,/day. With operating costs in excess of US$1,/day, it is easy to understand why many publicly listed companies have gone bankrupt. The highest earnings of the year were booked mid-ruary at US$45,/day with the nadir in ober when some fixtures would have resulted in negative earnings but for reduced ballast and laden speeds. Triangulation, AG/US Gulf followed by CBS/China can increase earnings by about another 3% if an owner is lucky and he is able to fix without too much waiting. The root of the problem is the vast shipbuilding programme from China in its quest for domestically controlled energy supply. Over the last five years, we have seen the Chinese controlled VLCC fleet expand from a few ships to a large armada: COSCO 22 VLCCs, Nanjing tankers 13, China Shipping 14, AMCL 1, HOSCO 5, Glasford 4. So a total of 78 modern VLCCs now trade AG and W Africa to China on various COAs, spot fixtures and "special relationships", all of which keep the industrial might of China Inc. running. Unfortunately, independent VLCC owners neglected to take this vast expansion of the fleet into account. They correctly predicted the increase in volumes of crude oil being lifted from the AG to go to China, though they did not take into account that this would be taken mostly on a brand new domestically built and controlled fleet. 211 has been the year in which the oversupply situation became a reality. The Chinese have strategically succeeded in delivering the life-blood of their industry, but it has been at the cost of the VLCC market. As we stand today, the shipowners who got it wrong currently own too many expensive ships, which are running at a loss. The ones who got it right sold out at higher prices a few years back, are now probably operating smaller older fleets, and are circling like vultures for someone in distress. We are seeing the first public companies facing serious financial difficulties, but these are only the early stages private investors are also feeling similar pain. Second hand prices are holding up for the moment because investors are unwilling to realise their losses. Losing US$3,/day on a US$1m investment can only go on for a finite amount of time, but when the alternative is to lose US$3m and sell out in one hit, it s a very difficult situation. Owners have responded by trying to consolidate the fleet. 212 will see the birth of the third VLCC pool. It remains to be seen if this can improve the freight markets. 211 TD3 AG/Japan - TCE 211 TD1 AG/US Gulf - TCE 5, 4, 3, 2, 1, -1, 1, 5, -5, -1, -15, -2, -2, Braemar Seascope Weekly Chartering Report 2

3 Crude Chartering 5/1/212 VLCC This is a rather confusing time of year as we continue to trade on 211 Worldscale rates, however for market assessment and this report we are using the new 212 rates. It seems that with co-operation from the US, the EU has now decided that there is a possible way to ban the importation of Iranian oil. The 45, bbls/day which Europe currently imports will certainly find a home in the Far East, however with another market closed to them, Eastern buyers will be able to exert more pressure on the price. Iran has responded with some sabre-rattling, threatening to close the Straits of Hormuz but this would result in a huge escalation of hostilities. The US secretary of defence has already said that, "Disruption to the flow of oil through Strait of Hormuz would threaten regional and global economic growth. Any attempt by Iran to do this would be illegal and unsuccessful." The VLCC market has responded positively over the holiday period and rates to the East are now 265kt x ws62.5 (based on 211 Worldscale). AG/West is steady at around 28kt x ws39.. West Africa has seen a few fixtures reported. Last done 26kt W Africa/US Gulf was ws65. (212), and East ws6. (211). Just to confuse matters, both were fixed off end Jan laycans. Meanwhile, a cargo in the Med was fixed/failed Ceyhan/USG 27kt x ws72.5 end/jan, quite a high rate because most of the ships in the North Sea area had already been fixed away to carry fuel oil to Singapore at the US$4m level. It has been a quiet week from the Indian charterers ex-w Africa with no activity as the oil companies wait for their confirmed stem dates from their suppliers. We assess W Africa/WC India at US$3.7m and W Africa/EC India at US$4m. The 3 day availability index shows 68 VLCCs arriving at Fujairah, only seven of which are over 15 years old, compared to a pre-christmas total of 36 VLCCs. So far for the month of Jan 212, we have seen a total of 98 cargoes covered. The freight rate for 28,mt AG/US Gulf is ws39. (211). With bunkers at US$721/tonne, US$44 up from our last report, owners' earnings are: Double Hull: US$-5,25/day (US$-4,7/day last week) The freight rate for 27,mt AG/East is ws62.5 (211), making owners' earnings: Double Hull: US$2,85/day (US$18,3/day last week) Route Size Load Discharge Today s Assessment Last Week s Average TD1 28, Ras Tanura LOOP ws32.5 ws32.5 TD2 265, Ras Tanura Singapore ws5. ws51. TD3 265, Ras Tanura Chiba ws5. ws51. TD4 26, Bonny LOOP ws6. ws59. TD15 26, West Africa China ws51.5 ws51. VLCC AG Weekly Spot Fixtures by Volume Intended Discharge (28th 211-4th Jan 212) VLCC AG Monthly Spot Fixtures by Volume Final Destination (ember 211) Korea/Japan 9% Spore/Indo 18% West 11% India 2% USA 6% Short East 26% Long East 63% China 47% Braemar Seascope Weekly Chartering Report 3

4 Crude Chartering 5/1/212 Suezmax As is the case every year, confusion reigned in the first week back after the Christmas break. With shipping professionals recovering from their holiday hangovers, there was a slow start to this week. Over the Christmas period, West Africa suezmaxes had continued to fix and rates had continued to rise. Ws99.5 was achieved a number of times by owners for W Africa/UK Cont-Med and this confidence carried on into the new year. As Worldscale rates switched onto the new (212) scale, there was the obvious correction, however at the beginning of this week there was a good level of confidence amongst the owners. As the week moved forward any cargo that quoted received four or five offers but there did not look to be any weak links for the charterers to exploit in the market. After some patience, one particular charterer managed to break the sentiment and fixed W Africa/UK Cont-Med at ws85. (212) which is equivalent to approximately ws1. on the old scale. This single fixture took the confidence out of the market and this led to the remaining owners following close behind, setting the market at ws8. (212) for US Gulf discharge and ws85. (212) for UK Cont-Med. This was seen as a slightly disappointing start to the year with rates stagnating when there was hope amongst the owners that the rates would push on. Moving into next week, we are yet to really see the last decade start in earnest - although we have seen good volumes of VLCC W Africa fixtures so the owners will be expecting to see decent volumes next week. The big question is whether the owners will be able to take advantage of any increase in activity, but going on current form this looks unlikely. Rather aptly, this story was mirrored in the Med/Black Sea market. Over the holiday period the fixing continued and the owners managed to push the rates up to ws13. which, apart from a brief spike in ember, were the highest rates seen in 211. Moving into the early part of this week, the Dardanelles was closed and the delays had increased to ten days northbound, putting a bit of further pressure on the list. With the amount of cargoes left to cover in January and the shortening list, one could have expected the rates to kick-on a little further. However, owners seemed to make the decision that ws13. was as good as it was going to get and they started trying to lock in these numbers. With the popularity of the Black Sea and the change to 212 flat rates, the Black Sea rates quickly dropped to ws12.5 (212) for UK Cont-Med discharge. Moving into next week, there are still a few cargoes left to cover from the Black Sea and we are seeing good levels of fresh Med cargoes in play. With the delays, this should lead to an increase in rates, although recent history tells us that the rates will remain static. There was a bit of excitement in the eastern suezmax markets over the holiday period and we finally saw some concerted movement in the rates. During the break there was a single fixture at ws95. (211 - equivalent to ws77.5 on 212) AG/East, which was built on increased confidence in the VLCC market and increased confidence in the suezmax western market. Unfortunately for the eastern players, both of these markets seem to have taken a turn for the worse which will have a knock-on effect to the suezmaxes. Currently, the AG/East market should be somewhere around ws9. with Indian cargoes paying a decent premium on top. There is not the volume of business for the suezmaxes in the East to maintain these rates, so the owners will be wishing that the VLCC market will stay strong. Route Size Load Discharge Today s Assessment Last Week s Average TD5 13, Bonny Philadelphia ws82.5 ws82.5 TD6 135, orossiysk usta ws15. ws , Mediterranean UK Cont ws97.5 ws1. 135, North Sea US Gulf ws8. ws8. 135, Ras Tanura South East Asia ws77.5 ws8. Suezmax WAFR Weekly Spot Fixtures by Volume Intended Discharge (28th 211-4th Jan 212) Suezmax Weekly Spot Fixtures by Volume Load Area (28th 211-4th Jan 212) S America 4% Med/Red Sea 22% USA 33% AG 19% W Africa 34% Caribs/EC Mex 16% NW Europe 45% Black Sea 16% Med/Red Sea 11% Braemar Seascope Weekly Chartering Report 4

5 Crude Chartering 5/1/212 Aframax Having returned from the holiday period, one couldn't help but feel there was some slight confusion in the markets as to where rate levels would be. With the recent short fixing weeks and many people taking time away from the office, this week was always going to be an interesting one. Thankfully for owners, there was not a vast amount of spot tonnage. In addition, the Baltic has seen a few replacements and prompt cargoes in the market which pushed rates up following the fixtures concluded earlier in the week ex-primorsk at 1kt x ws85. on 212 Worldscale rates. The highest reported fixture in the market for a fuel oil cargo out of the Baltic was 1kt x ws11.. In theory, there is sufficient amount of tonnage which means rates for Primorsk/UK Cont could easily remain at 1kt x ws85.. The North Sea has been very quiet this week with next to nothing done in the market. There have been strong winds in the North Sea and the rest of the UK, reportedly up to 1mph. If we saw even a minimal amount of demand, there would have been a strong possibility for North Sea aframaxes to firm, but it wasn't to be. Down in the Mediterranean and Black Sea, it has been a bit of a reality check for owners with respect to the state of the market. Over the festive period owners were enjoying some very profitable rates, but this seems to be over for the time being. Having switched from Worldscale 211 rates to Worldscale 212 without too much trouble, we have seen fixing levels come off, which will come as a relief to charterers as they have been paying some big numbers in recent weeks. Now, the market looks to be heading down back to more respectable levels in their eyes. Owners have little scope to fight this, as the tonnage list is larger than it has in a long time. Also enquiry currently is minimal at best. Black Sea Strait delays are as much as 12 days northbound, but with the quiet situation, charterers are able to take cover in advance. Both markets have come off so much that owners can expect TCE returns of US$2,/day at best, US$3,/day less than last week, although, these returns are still significant. With the current balance in the market, these will decrease further, unless we see some significant delays or enquiry. Route Size Load Discharge Today s Assessment Last Week s Average TD7 8, Sullom Voe Wilhelmshaven ws17.5 ws18.5 TD8 8, Mina Al Ahmadi Singapore ws1. ws1. TD9 7, Puerto La Cruz Corpus Christi ws12.5 ws11. TD14 8, Seria Sydney ws87.5 ws87.5 TD17 1, Primorsk Wilhelmshaven ws85. ws84.5 TD19 8, Ceyhan Lavera ws11. ws12. Aframax (West of Suez) Weekly Spot Fixtures Intended Discharge Area (28th 211-4th Jan 212) USA 13% Aframax (West of Suez) Weekly Spot Fixtures Load Area (28th 211-4th Jan 212) Carib/EC Mex 7% Black Sea 1% Baltic 24% Med/Red Sea 47% India East 14% UK Cont 11% W Africa 3% NW Europe 26% N Africa/E Med 45% Braemar Seascope Weekly Chartering Report 5

6 Jan Jan Jan Crude Tanker Summary Jan 5/1/212 TD Ras Tanura - Chiba TCE 12, 1, 8, 6, , 2, -2, TD Bonny - Philadelphia TCE 8, 6, , 2, TD7-8 - Sullom Voe - Wilhelmshaven TCE 8, 6, , 2, TD9-7 Puerto La Cruz- Corpus Christi TCE 45, 35, 25, , 5, -5, Braemar Seascope Weekly Chartering Report 6

7 Jan Jan CPP Chartering 5/1/212 Clean Products - East The LR2 market is operating on two separate levels at the moment, the parameters of which are based on geography. East of Suez enquiry has been very low this week. The distillates market has been quiet out of the Far East, however S- Oil targeted a newbuilding aframax ex-yard at cheap levels for a gasoil backhaul S Korea to Singapore. Reliance quoted the market with some gasoline barrels off 2-25 Jan which will end up in the US, but they are yet to find a ship to cover these with. Despite these low levels of activity, rates are remaining stable for now, in part due to the high levels of activity in the West, which will reduce the number of ballasting vessels from the Med. Naphtha enquiry has remained quiet, but we expect this to pick up as ruary tenders start to be awarded next week. As a result, rates are moving sideways on TC1 at a disappointing US$1,5 round trip TCE. In comparison, the West of Suez market has been very busy with up to eight cargoes being worked from the Med or UK Cont, which by anyone s scale is rather high on the LR2s. Some punchy numbers being banded around for naphtha to go east, and with a number of outstanding cargoes and not many ships, these rates could firm even further. The LR1 market takes a similar view to the LR2s this week. There is a lack of enquiry out of the AG or WC India, with a tonnage list that seems to grow daily. As a result the market has slipped on the TC5 to ws1. (212 flat) and US$1.85m all inclusive AG/UK Cont. The West market is active and very light on tonnage which may also produce some tough rates for charterers to swallow. Route Size Load Discharge Today s Assessment Last Week s Average TC1 75, Ras Tanura Yokohama ws87.5 ws87.5 TC5 55, Ras Tanura Yokohama ws1. ws1. TC4 3, Singapore Chiba ws122.5 ws124. TC12 35, WC India Japan ws119. ws121. TC Ras Tanura - Yokohama TCE TC Ras Tanura - Yokohama TCE 4, 3, 2, , 2, , 1, Braemar Seascope Weekly Chartering Report 7

8 Jan Jan CPP Chartering 5/1/212 Clean Products - West On the Continent, the return to the fray after the Christmas & New Year period has bought significantly increased flat rates reflecting the high bunker prices of last year causing a drop in the Worldscale multiplier. This has been further exacerbated this week, by three main factors; tonnage fixed over here from the states in mid-ember is starting to work through ports on the Continent and show prompt and early positions; with everyone back at work charterers are under absolutely no pressure to take forward coverage and are reverting to running cargoes on a much prompter basis, and although this year s Worldscale contains a much higher bunker element, bunkers are spiralling ever higher reflecting the geopolitical concern behind rising oil prices. Bunkers in Rotterdam have risen US$46/tonne this week, from US$624/tonne on Monday to US$67/tonne as of this afternoon. ketwise, three ships were confirmed between Christmas and New Year at 37kt x ws24., which would imply levels starting the year on the 212 scale at 37kt x ws195.. The first ship confirmed on the 212 scale was at ws187.5 and the next at ws18. where despite unquestionable downward pressure rates appear to have stalled. This represents levels of 37kt x ws215. on the 211 scale and even with increased bunkers is still showing in excess of US$18,/day on a round voyage. Whilst this is hardly a disaster, looking at the position list out beyond 12th/13th of the month it shows a plentiful supply of tonnage, with more ships coming in with cargo forces a conclusion that further losses are inevitable. Like the rest of the western hemisphere markets the Med has seen a softening with the new year, cross-med rates are now hovering at 3kt x ws195. with further losses anticipated. Trans-Atlantic activity, whilst not really seen, would nominally be some ws1. points below levels being seen ex-continent. In the Caribbean, like everywhere else, is softening. Caribs/USAC is currently 38kt x ws18. and under pressure. The backhaul is rated at 38kt x ws13. and also under pressure with most market watchers anticipating next done to be in the ws12s as tonnage builds. Short voyages inter-caribs have remained surprisingly firm, but with rates coming off elsewhere it seems a foregone conclusion that these will adjust downwards as well. Route Size Load Discharge Today s Assessment Last Week s Average TC2 37, Rotterdam New York ws177.5 ws181.5 TC3 38, Aruba New York ws18. ws184. TC6 3, Skikda Lavera ws19. ws198.5 TC Rotterdam - New York TCE TC Aruba - New York TCE 3, 2, , 15, , 1, 5, Braemar Seascope Weekly Chartering Report 8

9 1-Jan Jan Jan Jan-12 US$/day BCI Dry Cargo Chartering 5/1/212 Capesize The holiday season has taken its toll on the capesize market, opening the New Year with a TC Average of US$24,/day, down from US$27,5/day before Christmas and at time of writing is down further to US$17,821/ day. Whilst most parties are still getting up to speed, it would seem the build up of tonnage will need sustained demand from the majors to steady the market before Chinese New Year. In the Pacific the Majors have started the year in a downfall with US$11/tonne being fixed at the start of the week for mid-january dates and at time of writing end-january has been done by majors at US$9.9/tonne. Many owners are opting to ballast rather than compete at these reduced rates. That said, the ballasters are being faced with a quiet Atlantic basin and a severe lack of coal from Richards Bay. Trans-Atlantic RV rates have slipped to US$22,7/day with Tubarao/Qingdao offered at US$22,/day with little reaction from owners. Paper has taken something of a hit, which is likely to mean that period rates have peaked for the time being. The Baltic Capesize Index vs Atlantic & Pacific Earnings 125, 1, Atlantic Pacific BCI 1, 8, 75, 6, 5, 4, 25, 2, Braemar Seascope Weekly Chartering Report 9

10 1-Jan Jan Jan Jan-12 US$/day BPI Dry Cargo Chartering 5/1/212 Panamax Being the first full week following the Christmas period, activity in the Pacific has been slow and patchy. Although many vessels have headed towards the Atlantic during ember, this region still remains over-tonnaged. There has been a steady level of enquires for period charters for durations of 1-2 years, but ideas remain apart by around US$1,-US$1,25/day with the mid-point close to US$12,/day. Trans-Atlantic business has been limited and rates remain at subdued levels. With more Pacific ballasters expected to appear in this region any upside potential to rate levels remains capped. The Baltic Panamax Index vs Atlantic & Pacific Earnings 6, 5, Atlantic Pacific BPI 6, 5, 4, 4, 3, 2, 1, 3, 2, 1, Braemar Seascope Weekly Chartering Report 1

11 1-Jan Jan Jan Jan-12 US$/day BSI Dry Cargo Chartering 5/1/212 Handy/Handymax/Supramax The Pacific market has remained steady into the New Year following the slightly firmer levels seen prior to yearend holidays. With a quiet start to the week, prompt tonnage in the Far East is competing to maintain recent levels and a flow of new cargo is needed to absorb existing tonnage and allow any upward momentum. Lower rates persist for business back to the Atlantic, which has steadied from recent highs. There is plenty of spot tonnage on the Continent this week after owners were unable to cover their positions before the holidays. Combined with a lack of activity off the Continent so far this week, this steady supply of tonnage looks set to stay. The handysize market in EC South America has remained relatively static this week. We have seen a significant ratio of cargoes towards the West Med which owners are rating in the upper teens. There has been little coastal business this week apart from one or two cargos to NC South America paying in the very low teens. The India market started the week slowly and it is yet to see how it will react fully to the increased iron ore fines/lumps export tax, however, it will not be positive for owners. As the week has progressed a few orders have emerged with rates for a 4,mt 1% stem approaching the US$12/tonne mark. Most owners are willing to sit spot for the meantime to see how the beginning of next week develops. The Black Sea market has continued its downward turn. There has been little in the way of grain orders emerging especially for the larger sizes. But demand for vessels willing for a trip to China/India remains steady. Although, even these rates have begun to slide, with charterers offering mid-high teen levels for 35-4 day duration. In the US Gulf rates are showing little resistance for voyages to the Far East. Charterers are not getting the promised number of ballasters from the pacific as supramaxes ex NE Asia are able to find business without having to cross Panama. But there still is not enough demand to drive the market up anytime soon. For many the preference is to stay in the stronger Atlantic basin. A 55, dwt ship fixed 2-3 legs with redelivery in the Atlantic for US$17,/day. Earlier this week, a 57, dwt vessel fixed for US$31,/day for a trip to the Far East with petcoke. The Baltic Supramax Index vs Atlantic & Pacific Earnings 5, 4, Atlantic Pacific BSI 5, 4, 3, 3, 2, 2, 1, 1, Braemar Seascope Weekly Chartering Report 11

12 Asia / Australia ket News 5/1/212 Asia / Australia News Indonesia s rice output may rise Indonesia s agricultural minister expects 212 rice output to reach around 72m tonnes as a number of new fields are planted and good weather conditions improves yields. According to the Central Statistics Office, Indonesia s rice production in 211 most likely fell by around 1.6% to 65.39m tonnes y-o-y. India to further tax iron ore exports The Indian government has allocated a further tax on iron ore exports, increasing it from 2% to 3% with the intention of keeping the resource for domestic steel production. It is expected that Indian iron ore exports will decrease to 6m tonnes from 9m tonnes annually. Another of the Indian government s reasons for the tax is to drive domestic companies to acquire iron ore assets outside of India, in places such as Africa and Australia. Australian harvest in 211/12 one of the best It is expected that South Australia will fulfil predictions of reaching a 7.6m tonne crop for 211/12, 2.7m tonnes less than the record crop in 21/11. Western Australia has secured its second largest harvest on record in 211/12, with grain deliveries of 13.2m tonnes as of last week. Although many farmers were hit with unexpected rains which affected their crop s quality, it cannot be argued that this year s crop was one of the best. China steel production down in final months of 211 Although China cut steel production in the final months of 211, it is expected that output will rebound this year. At present, China s daily steel production is 1.66m tonnes, but this is expected to recover to 1.9m tonnes within the next few months. China stockpiles down China s imported iron ore stockpiles fell to 95.6m tonnes the week ending 3 211, according to Mysteel. Vale s first giant ship reaches Chinese port Vale s Berge Everest (388, dwt) reached Dalian port last week, with an estimated 35, tonnes of iron ore on board. It took two and a half days to discharge its cargo. Braemar Seascope Weekly Chartering Report 12

13 Jan Jan Jan Jan Jan-12 Container Chartering 5/1/212 Containers True to form, the final week of the year passed by very quietly, with a predictably subdued level of fixtures concluded. As always there have been ongoing negotiations which started before the holiday season and even the odd spot requirement, which at this time of year - with some quiet weeks still likely to follow, will always induce owners with both spot and prompt tonnage to come to the negotiating table in a bid to keep their vessels moving. Generally, the length of period available remains low and owners unsurprisingly will be more willing to swallow a lower rate than they usually would for longer, more substantial business. In light of these "fixtures of convenience" and in the absence of so many market players, our BOXi therefore remains unchanged this week until normal service resumes. We would like to wish all our readers a very happy and healthy new year. Vessel (Teu/Hmg) Gear Speed Knots Index + / - 51/285 Gearless /44 Gearless /415 Geared /65 Geared /715 Geared /925 Geared /115 Gearless /1125 Geared /13 Geared /16 Geared /19 Geared /2 Gearless /25 Gearless /28 Gearless Index Total The Box Index B O X i Braemar Seascope Weekly Chartering Report 13