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Friday, April 20, 2018

MARKET INFORMATION

Where Suezmaxes go, VLCCs will follow-  Brokers report

According to Bassøe Shipbrokers, over the last year the suezmax freight market has to an extent been ”front running” the VLCC market. A tightening of the suezmax market has had a positive effect on VLCC rates, as last year’s development in the West African market proved. The same “front running” tendency now also appears to be the case in relation to fleet renewal. So far this year, 7 suezmaxes have been sold for demolition (plus one for conversion), against only two VLCCs. Average rates over the same period based on Bassøe Friday index for 'old' vessels were USD47,376 and USD31,616 per day for VLCC and Suezmax respectively. The high level of suezmax scrapping activity has in other words taken place during a period of very firm freight rates and the decision to scrap has become less dependent on spot market levels. There are several reasons for this. Firstly, operating suezmaxes in HBL mode limits trading flexibility, as cubic capacity tends to drop below one million barrels. Secondly, it is becoming increasingly difficult to get older tonnage accepted. This goes for load ports (particularly in West Africa), as well as in discharge ports, where, contrary to VLCCs, suezmaxes actually operate within port limits. Thirdly, and possibly most importantly, the double hull contingent in the suezmax fleet is now 50% (49.5% for suezmaxes vs. 30% for the VLCCs). 17 suezmaxes will turn 25 years of age during this year, in addition to the 29 vessels already 25 years or older. Trading old vessels is becoming increasingly difficult, as charterers are getting more modern and more double hull units to choose from.

48 Suezmaxes fixed to 2003 and later – Brokers report

The Johan G Olsen Suezmax listing of March 2001 include 313 Suezmaxes of which 44 are fixed for redelivery in 2003 and beyond. The report has 61 suezmax tankers to be delivered 2001 – 2004 and only 4 of these currently have long-term contracts. The major oil companies altogether have 15 Suezmaxes on long term charters; BP has 13, ExxonMobil has 2 Suezmaxes, for redelivery in 2003 and later. The major oil companies altogether own or have on bare-boat 23 tankers: BP and Chevron owns 8 Suezmaxes, ExxonMobil owns 5 Suezmaxes, and Shell and BP own one Suezmax each.

The 10 biggest Suezmax operators have altogether 111 Suezmaxes or 35% of the fleet.

  1. Frontline has 18 Suezmaxes in the spot market, plus 8 OBOs both on contract and in the spot market, 2 Suezmaxes on long TCs and 2 newbuildings.
  2. Dynacom has 13 Suezmaxes in the spot market, plus 4 newbuildings
  3. Metrostar has 12 Suezmaxes in the spot market, one on TC, plus 2 newbuildings
  4. Petrobras has 8 shuttle Suezmaxes plus one for storag
  5. Ugland Nordic Shipping has 8 Suezmaxes all on TC arrangements
  6. Thenamaris has 6 Suezmaxes plus 4 newbuildings
  7. Knock Tankers has 8 Suezmaxes
  8. Chevron has 7 Suezmaxes
  9. Ceres Hellenic has 5 Suezmaxes plus 1 newbuildings
  10. Athenian Sea Carriers has 7 Suezmaxes newbuildings

78 VLCCs fixed to 2003 and later- Brokers report

Johan G Olsen VLCC listing of March 2001 includes 444 VLCCs of which 78 are fixed for redelivery in 2003 and beyond. The report has 95 VLCCs to be delivered 2001 – 2004 and only 15 of these currently have long-term contracts.

The major oil companies altogether have 39 VLCCs on long term charters; Tokyo Tankers has 22 VLCCs for redelivery in 2003 and beyond, Shell (including Showa Shell) has 9, ExxonMobil has 5, Chevron has 2, and BP one VLCC on long TC.

The major oil companies together own or have on bare-boat 39 tankers; ExxonMobil owns 12, Tokyo Tankers owns 7 VLCCs, Chevron owns 8 VLCCs, and Shell and BP own 6 each.

The 10 biggest VLCC operators have altogether 227 VLCCs or 51% of the fleet.

  1. Mitsui OSK, 33 VLCCs, only one in the spot market, average age 7 years, 5 on order
  2. World Wide, 27 VLCCs, 15 in the spot market, average age 9 years, 4 on order
  3. Frontline, 26 VLCCs, 22 in the spot market, average age 5 years, 3 on order
  4. NYK, 26 VLCCs, 2 in the spot market, average age fleet is 6 years, 5 on order
  5. VELA, 21 VLCCs, average age fleet is 10 years, 4 on order
  6. Bergesen, 19 VLCCs, 11 in the spot market, average age fleet is 15 years, 4 on order
  7. AP Møller, 15 VLCCs, 11 in the spot market, average age fleet is 5 years
  8. Astro Tankers, 11 VLCCs, 8 spot, average age fleet is 10 years, 2 on order
  9. ExxonMobil, 12 VLCCs, average age fleet is 14 year
  10. Euronav, 9 VLCCs, 6 in the spot market, average age fleet is 13 years, 4 on orde
  11. Overseas Shipholding, 9 VLCCs, 6 spot, average age fleet is 5 years, 4 on order
  12. Idemitsu, 9 VLCCs, average age fleet is 11 years

The average age of the fleets of the above operators is just under 10 years, they have 39 tankers on order, about one third of the orderbook.

Strong tanker market despite oil production cut

Why does the large tanker market remain so strong even after OPEC has cut production by 1.5 mbd from 1February and a further 1 mbd from 1April, ask shipbrokers Lorentzen and Stemoco in their latest weekly report. The main reason, they say, seems to be that the crude markets – both the IPE and the NYMEX – have for several weeks have been in contango. This state signifies a surplus crude oil market where prompt supplies are selling at a discount to future supplies implying that refiners can lock in profits by actually selling the crude forward in the futures markets.  The result is that refiners are buying for storage at a time of the year when they are normally not buying crude. Producers have been responding by quietly giving buyers what they are asking for, at the expense of newly agreed output quotas, which partly explains why actual OPEC production has been exceeding quotas for February and March.