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Monday, September 24, 2018

POINTS OF VIEW - OBOs switching from wet to dry bulk

The combination carrier is not the big influence it used to be ten years ago when it was a major swing factor on spot market rates. That is because the fleet has shrunk by more than 60% in the last ten years from just over 30.1m dwt to just 11.6m dwt in only 116 units, according to Clarkson Research figures. Most of that decrease occurred in the mid 1990s, and even five years ago the combo fleet was 16.6m dwt.

The stronger tanker market later in 2002 and in the first part of 2003 drew many OBOs into the tanker trades - about 90% were trading 'wet' by mid year. Nevertheless the about-turn in the relative fortunes of bulk carrier operators and tanker operators has seen a number of OBOs pull out of the oil trades and take advantage of dramatically improved dry bulk rates. Several brokers have remarked that the current tightness of suezmax tanker availability for August and early September dates in the Atlantic is partly because 'the strong capesize market has resulted in several OBOs leaving the relatively weaker crude market.'

This time last year, a modern capesize bulker could get  just $10,000 a day t/c equivalent on the spot market or $14,250 for 12 months t/c. At the same time a suezmax tanker was making $14-16,000 a day tce spot and $18,750 for 12 months timecharter. That was a reasonable incentive for OBOs to trade in oil.

By December last year, capesize rates had improved to $24,500 a day tce on the spot market ($18,500 for 12 momths t/c). But Suezmaxes were generating an impressive $46-53,000 a day tce on the spot market, with rates for 12 months t/.c up to nearly $30,000 a day. No wonder OBOs took to fixing in oil!

Today a Capesize is showing $32,500 / $38,000 a day for a transatlantic / transpacific round voyage, $45,000 a day for a trip Atlantic to Far East and $28,000 for Far East to Europe. It can even secure $27,000 a day for 12 months timecharter. Suezmaxes are showing well under $20,000 a day right now, even at the slightly improved W80 rate levels seen towards the end of the week.

Little wonder, then, that combination carriers are coming out of oil and going into a good long dry bulk trip while the going is good.