Marine Link
Monday, February 20, 2017

Seaonal Surges Not Enough To Lift Rates From Depression

Sustained strong oil demand growth is required to lift product tanker freight rates out of their current depressed levels, shipbroker Simpson Spence & Young said in a new report. Temporary seasonal surges could be seen in rates but it would take until the northern hemisphere winter of 2000-2001 before the sector experienced a sustained rise in earnings, SSY said in its latest half yearly World Oil tanker Trends report. "The only factor that can lift the product trade out of the gloom is sustained and strong oil demand growth," SS&Y reported. Positive signs were seen in current global oil demand, SS&Y said, but a bloated vessel orderbook precluded near term recovery.

Tanker Trends

Freight rates for crude tankers loading early April in the Middle East were climbing early last week as shipowners held out for higher prices in expectation of heavy vessel fixing, brokers said. VLCC rates to the U.S. Gulf were expected to rise five or more Worldscale points to W62.5-65 ($10.75 per ton) for the next done fixture, some brokers said. Japan shipment prices were also lifting with the latest bookings at W70 ($7.50 per ton), up from W67.5 in the week before. "We believe this week will be heavy for one reason alone, there will be placement of barrels West to alleviate the shortage that the U.S. market is stressing," broker Marinav Shipping & Trading forecast in its March 13 report.

Tanker Trends

Strong demand for VLCC tankers in the Middle East failed to create a massive breakout in rates, but owners were happy as bunker fuel prices continued to fall, brokers said early last week. Expectations that a lack of modern tonnage would hike rates for mid-April oil major-approved vessels failed to come true. An Exxon cargo for Singapore lifting from three Mideast ports finally got done at the going rate of W77.5 (about $5.00 per ton) after early week offers of W100 had excited dreams W87.5 ($5.50) could be achieved. Other eastern rates held ground or crept up with the average for Japan W77.5 ($8.50 per ton) and W75 ($7.00) for South Korea. Western prices also inched up to around W65 ($11.25 per ton) for the U.S. Gulf while Red Sea fixtures achieved W72.5-75.

Tanker Trends: Markets Lose Steam During Asian Holidays

Tanker markets cooled as Asian holidays took the steam out of recent strength, but some brokers saw it starting to simmer again last week. Holidays in Japan and Korea this week coincided with the end of most charterers' May programs, brokers said May 5. Approximately 18 VLCC fixtures of five million tons were reported in the Middle East Gulf, down from 22 of six million tons the week before, according to broker E.A. Gibsons. "However, there was sufficient momentum in the market to maintain rates at their previous levels," Gibsons said. With modern tonnage remaining in tight supply it was reasonable to expect rates to stay at current levels or even improve over the next few weeks, it added.

Shipping’s Half Year Report – “Must Do Better”

Graph: Clarksons Research

With the spread of challenges facing the industry, it’s unlikely the shipping markets would achieve many top grades, says Clarksons Research. However some sectors might still achieve an “A” for effort and this week’s analysis reviews the markets’ performance in the first half. The Graph compares performance in the first half of 2016 to the averages since the financial crisis, as a barometer of performance against trend. First on the graph is the ClarkSea Index, our average earnings index covering all major sectors, which is 18% down on the average since 2009 and 30% compared to 1H 2015.

Despite Rising US Production, Saudi Crude Still Flows In

Saudi crude & the US market: Chart courtesy of Poten & Partners

Reported spot market activity from the Arabian Gulf remains on an upward trend since 2010 in spite of rising US crude production, reports Poten & Partners’ in their latest ‘Tanker Opinions’. Over the past few years US domestic crude oil production has supplanted foreign crude oil imports. To the extent that they possibly can, domestic refiners have shifted to local grades that have trended at an often significant price discount. Interestingly, however, fixture activity on the Arabian Gulf to US Gulf trade route remains robust.

Inland Shipping Company Jade Orders Tanker

Inland shipping company Jade ordered a tanker with a loading capacity of 10,000 tons. The inland vessel will be 135 m. long, 20 m. wide, gets a draught of 4.2 m and contains 28 tanks. It will be deployed on the Rhine. So far some six tankers of a comparable large size are ordered or in use, indicating a trend of upscaling of the inland tanker business.

Banking Sector Feels The Effects Of Consolidation

The number of major banks involved in the shipping industry has decreased substantially over the last few years. According to Michael Parker, managing director of Citibank, this is just one of many sectors hit by the ongoing consolidation trend in the shipping arena. "Banks can not live on interest margin alone without a substantial rise in spreads. They are having to look for other revenues/fees," said Parker, speaking at the LSE Shipping Finance Conference in London on November 14-15, 2000. Mergers in the banking sector such as Chase and JP Morgan, and Royal Bank of Scotland and NatWest, are illustrative of the fever of consolidation that has also spread into the bulk, P&I, classification, ports and e-commerce sectors.

Tanker Orders Will Not Be Cancelled

According to a report from Emirates Business 24/7, existing new-build programs in the tanker sector of the shipping industry are expected to go ahead with no fear of cancellations despite the current slowdown in the industry's performance, said a senior executive. While ship orders in other sectors have suffered from unprecedented cancellations due to financial constraints, the relatively stronger position of the tanker sector has helped to prevent a similar trend. (Source: Emirates Business 24/7)

Tanker Euphoria Drives Ratings Bump

The cyclical nature of the tanker market continues its trend upward, a development which has Lazard & Freres & Co. stamping both Nordic American Tankers (ASE: NAT) and Knightsbridge Tankers Ltd. In a pair of separate corporate profiles released June 29, Lazard & Freres’ James L. In accordance with this information, Winchester has raised VLCCF’s 2000 dividend estimate to $2.32 from $2.29, a dividend which implies of yield of 11.9%. There are a myriad of factors driving the current VLCC surge, chief among them increased oil production and a lack of qualified tonnage. Oil production was boosted by a 708,000 bpd rise in OPEC quota, agreed June 21 to help keep oil pricing in the desired $22-$28 range.

MISC Sees Growth Opportunities

Amidst fears of a tanker glut, MISC Bhd sees growth opportunities in the tanker business. President and chief executive officer Datuk Shamsul Azhar Abbas said shipping was a cyclical business and industry players recognized that there would be opportunities to expand during a downturn. An increase in oil prices, a number of new tankers transporting crude oil and increasing size of oil tankers fleet worldwide had raised concerns among the shipping fraternity of a potential tanker glut. It was reported that the size of the oil tanker fleet expanded 3.8% this year, overwhelming the 1.7% growth in in crude oil demand estimated by the International Energy Agency.

Glimpses of AIS Trends in the PortVision 2014 Crystal Ball

AIS Display: Image Wiki CCL

Houston, Texas-based PortVision, a leading provider of business intelligence solutions for the maritime industry, shares its projections for the top vessel-tracking trends that it believes will have the greatest impact on the maritime industry during 2014. Trend #1: Improving real-time visibility and decision-making. Advances in AIS-based vessel-tracking tools and technology that move the industry beyond simple “points on a map” to on-demand and immediately actionable business insights and intelligence. Trend #2: Improving marine terminal efficiencies.

Shipping industry market trends for 2014 - John Nikolaou

John Nikolaou

Greek shipowners have returned to the top of the global shipping economy by controlling a gross tonnage of 164 million tons, overtaking the Japanese on 159.4 million tons. According to Clarksons, this global lead illustrates that Greeks operate much bigger ships because they own 4,984 vessels against 8,537 managed by the Japanese and 6,427 by the Chinese. Japanese have invested huge funds during the past decade which resulted in significant losses during the crisis, while Greeks proved to be more conservative during the period of industry growth and had less negative impact on them.

D’Amico Sees Q1 Net Profit of $11.4Mln

Image: D'Amico International Shipping

Italy-listed D'Amico International Shipping (DIS) made a net profit of $11.4m in the first quarter, reversing its net loss of $6.8m last year, as the product tanker freight market improved. The board of the product tanker owner on Wednesday approved first quarter 2015 results of base time charter revenues (TCE) of $77 million. "Our company has achieved net profits of $11.4 million thanks to a fast-growing tanker market," said CEO Marco Fiori. "The tanker market has improved significantly in the first quarter of 2015…

Tanker Market is Solid

The year 2001 must be described as a very healthy year for tanker owners. Although it is a fact that freight rates for all tanker types have fallen substantially and continuously through the year, the average rates for the year have been quite strong. For product tankers of various sizes, 2001 was even better than 2000. Rates for medium sized crude carriers were moderately weaker, while for VLCCs they dropped significantly. Despite declining freight rates for crude carriers, the profitability for all tanker was, for the second consecutive year, remarkably high. Modern VLCCs started the year at an incredible $70,000/day on the spot market. Almost immediately, however, the declining trend set in which was to last all through the year except for a brief upturn in September.

China Imports More Oil Than U.S. for First Time Ever

China reached this milestone in December 2012, as its net petroleum imports surpassed those of the U.S. In a recent press release NYC-based PIRA Energy Group reports that weak reported oil demand in the U.S. reduced the commercial stock draw. In Japan, crude runs began to ease, which built crude stocks. Every year for at least the last two decades, Chinese oil demand has increased in both absolute and relative terms, that is, as a percent of world total demand. Since the price spike of 2008 and the following recession, U.S. oil demand has been declining in both absolute and relative terms, for all years except 2010. This, coupled with growing U.S. oil production, has led to a downward trend in U.S. net oil imports, while Chinese net oil imports continue to grow inexorably.

Are Tankers Going the Distance?

Graph:  Poten & Partners

What is happening to the average voyage length of crude oil tankers? Tanker market pundits are continuously discussing the reasons for the strength of the market, especially since the world is experiencing only modest demand growth. What are the key drivers for the significant increases in rates? Some people point out that ton-mile demand has increased as a result of more long-haul crude oil movements, i.e. average distances have increased. These statements are generally based on anecdotal information…

KPI Project Gains Momentum

So far, 120 companies have registered with the international KPI Project, started by InterManager but now an industry-led initiative. KPI data is being uploaded from more than 1,600 vessels into the web-based InterManager KPI Environment (IMKE) system. To date more than 5,000 sets of data have been submitted for each KPI category — enabling analysis to provide industry rankings for each measurement. Of the vessels submitting data tankers form the largest sector. Capt. Szymanski commented…

Bergesen Profits Surge 89%

Norwegian shipping firm Bergesen reported that a solid tanker market has led to an 89 percent surge in nine-month operating profits, a trend that will help to boost earnings for the rest of 2000. The company, which owns and operates shipping vessels, posted operating profits in the nine months to September 30 of $110.5 million, jumping from $58.6 million in the same period last year. "Bergesen's operating profit is expected to be higher in the fourth quarter than in the third," the company said in its quarterly report. For the third quarter alone, it posted an operating profit of $50.5 million. "The tanker market is expected to remain buoyant despite a high number of newbuilds and a possible drop in the rate of growth in the demand for oil in the first half of next year," Bergesen said.

Top Tankers Drops to New Low

Top Tankers fell to a new low on Monday. The stock fell for the first two hours of the session and then added another decline in the afternoon. Shares finished at $3.59, down 56 cents on the session. The stock has been trending lower for about six weeks and has given up $3.50 over the span. Souce: Trading Markets

BIMCO - Oil Product Tankers Earnings Decline as stockbuilding Slows Down

Oil Product Tanker Earnings

BIMCO’s expectations remain as the oil product tanker fleet continues to grow with earnings at the lowest since Q3 in 2014. But there is still money to be made in the second half of 2016. The oil product tanker market has reached a net fleet growth of 4.3m DWT so far in 2016. That is well in line with BIMCO’s full estimate of 8.5m DWT for the full year 2016. The main drivers of the total growth continue to be the MRs and LR2s. With a net fleet growth of 5.8 % in 2015, the oil…

Ultra-Long-Stroke Engine Passes First Test

View of the new 7G80ME-C9.2 engine on the testbed in Korea

7G80ME-C9.2 passes shop test successfully; new VLCC trend continues on course. HHI-EMD, the engine and machinery division of Hyundai Heavy Industries, has reported that the world’s first MAN B&W 7G80ME-C9.2 passed its official shop test on 16 January 2013 in Korea. The MAN Diesel & Turbo licensee reported that the shop test proceeded as expected and was a success. Engineers from MAN Diesel & Turbo took part in the entire prototype process, culminating with the very first engine start on 10 January, the official shop test on 16 January and an overhaul inspection the following day.

Tankship Major Crystal-gazes Interestingly

Tankship 'Devon': Photo courtesy of Euronav

Euronav, report a trading loss of almost US$ 119-million after tax in year-ending 2012 report, expect oil transportation market to re-balance in 2013. On the supply side, given the current state of the tanker market and the difficulty most owners face securing financing it is most probably safe to assume very few newbuilding contracts will be placed in 2013. The market also expects fleets to consolidate due to market pressure. Finally and most importantly, the poor market returns for the last 2-3 years, should push owner of relatively old tonnage to scrap their vessels.

Maritime Reporter Magazine Cover Feb 2017 - The Cruise Industry Edition

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