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Thursday, January 18, 2018

Trade Down News

Oil Prices Are Down … But Are They Out?

U.S. oil prices fell Monday on renewed concerns that the OPEC cartel's recent cut in production would not be enough to counter the impact of a global economic slowdown. U.S. light sweet crude for September delivery traded down 1.4 percent, or 23 cents, at $26.96 a barrel. London Brent futures for September delivery traded down 21 cents to $24.98 a barrel. Oil prices have declined steadily since late May amid increasing evidence that the global economic slowdown is eating into demand for petroleum this year. Concern over falling prices and a sustained rise in spare petroleum stocks spurred the OPEC producer cartel to agree last week to a 1 million barrels per day (bpd) output cut. But traders were reluctant to push prices up without indications that the world economy is rebounding.

Shipping loan losses hit Norwegian bank DNB's earnings

Q2 net profit NOK 4.65 bln vs f'cast NOK 4.77 bln; loan losses NOK 554 mln vs fcast NOK 398 mln. Bank on schedule to fulfill capital requirements, but shares down 4.6 percent, Swedish bank shares lower. Higher-than-expected loan losses in the shipping sector ate into DNB's second-quarter earnings, sending shares in Norway's largest bank down almost 5 percent on Thursday. Nordic banks made it through Europe's recent financial crisis relatively unscathed, but have suffered from their exposure to countries in the Baltic region and to a shipping sector which has struggled with overcapacity in recent years. DNB, one of the world's biggest lenders to the shipping sector…

Containers, Crude Drive Q1 Increase at Marseille Fos

Photo: Marseille Fos

A record month for containers and a revival in crude oil imports boosted first quarter throughput at leading French port Marseille Fos to 20.1 million metric tons – up by 1.3 million metric tons or 6.9 percent on January-March last year. Box traffic rose 8 percent to 312,820 TEU after growth of 9 percent at the deepsea Fos terminals and 5 percent at the largely intra-Mediterranean Marseille facility. The performance was marked by a 15 percent increase in March, when the port handled an all-time high of almost 116,000 TEU.

Aframax Rates Jump 40 Percent From Mexico To Venezuela

The cost of an Aframax tanker to carry crude from Mexico and Venezuela to the U.S. has surged by 40 percent in the last week as cargo owners scrabble over a fast-dwindling fleet, but in Europe trading is dull. "You won't find a ship available now until August 12, so the ship owners are getting very bullish on rates," one U.S. broker said of the Caribbean market on Wednesday. He pegged the upcoast trade on Aframaxes (70,000 tonners) at W165. But Thursday morning's fixture lists from Europe showed that Chevron had snapped up the Genmar Agamemnon for August 12 loading at the very firm rate of W175 ($1.29 per barrel), raising the possibility that charterers would have to wait even longer for available ships - representsing a rise of $0.41 per barrel in the course of a week.

Clean Tanker Rates Drop Another 10 Points

Clean tankers in the intra-Asian trades have suffered an eighth week of stagnant trading, causing rates to slip another 10 points to W240 ($15.69 per ton), Singapore brokers said on Wednesday. "The panel rate (judged by a panel of six brokerages) is around W250, but we think it's much nearer W240 at the moment," said a broker. The benchmark trade from Singapore to Japan on 30,000 ton tankes almost touched W300 in June ($19.62 per ton). Another Singapore broker pegged the trade at W245 and said to ignore rumors of a fixture this week at W230. "There's just very little enquiry for ships from Singapore," said the broker. Singapore brokers were uncertain of the underlying reason…

Greek Shipping Company Gets Hit With Defaulted Junk Bonds

A Greek-owned shipping company said on Thursday it would seek damages from holders of its defaulted junk bonds who last week "arrested" one of the company's ships as security for a $175 million repayment claim. The 25,900 gt Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. Enterprises Shipholding defaulted on the bond's $7.76 million semi-annual interest coupon in July. "Due to this wrongful attachment (arrest), the company has immediately experienced a loss of hire of thousands of dollars per day and exposed itself to... massive claims by cargo interests," said an Enterprises statement on Wednesday. "The company intends to seek compensation for all damages arising out of the attachment," it added.

Brent Crude Hits 16-month Low Under US$99

HFO: File image

Brent crude dropped to a 16-month low under $99 per barrel on Wednesday, stretching its losses into a fifth session amid continued worries about rising supplies and weak global demand. While a larger-than-expected fall in weekly U.S. crude stocks kept a floor under oil prices, gains were curbed by a firmer U.S. dollar that makes commodities priced in the greenback more expensive for holders of other currencies. The dollar index stood near a 14-month high, with some investors betting the U.S. Federal Reserve would raise interest rates earlier than previously thought.

Port Hedland to Reopen as Cyclone Fades

File Image (CREDIT: AdobeStock / (c) mode list)

Australia's Port Hedland iron ore terminal will likely reopen on Saturday after Australia's weather bureau cut the forecast strength of a cyclone bearing down on the continent's far northwest, the port's operator said on Friday. Cyclone Joyce, a Category 1 storm, is holding just off the beaches of Pilbara iron ore belt, prompting the overnight closure of the world's biggest iron ore export terminal, 1,700 km (1,050 miles) north of Perth, as a safety precaution. Shipping operations are expected to resume at 6 a.m. Saturday (2200 GMT Friday) should weather conditions improve.

US Oil Drillers Cut Rigs as Crude Prices Collapse

U.S. energy firms cut a surprisingly sharp 13 oil rigs this week, the first drop in seven weeks, as a renewed slump in prices this summer forced drillers to make a second round of cut-backs. The decline erases weeks of small gains and brings the total to the week ending Sept. 4 down to 662, the lowest since mid-July, oil services company Baker Hughes Inc said in its closely followed report on Friday. "Clearly the precipitous drop in oil prices has hit capital expenditures for new drilling in the U.S. with today's Baker Hughes rig count numbers. With prices remaining at relatively low levels without much relief in sight, we are likely going to see further declines," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland. U.S.

Clean Tanker Decline Deepens

Tumbling freight rates for clean tankers in the Atlantic have dropped steeply this week, and brokers pointed to the almost total closure of most transatlantic arbitrages as the reason. "The Continent transatlantic market has collapsed with the close of the arb'," said one New York tanker broker. London's Baltic Exchange closed on Tuesday with its assessment of the Rotterdam to New York trade down by nearly nine points on the preceding day to $0.26. Tankers for gasoline cargoes of 30,000 tons were being fixed at over $0.36 at the start of January. Traders said on Tuesday that the arbitrage would still be open for some types of gasoline if freight rates were to fall slightly.

Pegasus Tanker Fleet Is Back In The Game

A crucial Caribbean tanker fleet re-entered the market this week, having been held back for over a month because of a dispute between its owner, Pegasus Shipping, and junk-bond creditors in New York. U.S. brokers said the fleet's return would add surplus tonnage to a market that is already cooling, and would put further downward pressure on freight rates. Fuel oil freight stood at around $1.65 per barrel for 50,000 ton upcoast cargoes on Friday (April 27), compared to about $1.90 per barrel in mid-March, brokers said. Pegasus said the two time-charters and five spot fixtures so far completed were all done at market rate. Chairman Nicos Peraticos has resumed negotiations with bondholders and hopes to complete a buy-back of the $150 million Pegasus debt in June, a spokesman in London said.

DP World to Price US$1-Bln Convertible Bond Issue

DP World Jebel Ali: Photo DP World

Dubai's DP World plans to raise $1 billion with a convertible bond issue of 10 years duration on Thursday to fund growth opportunities and diversify its funding sources, the Dubai-based ports operator said in a statement. The issue is a rare example of an international convertible bond from a Middle Eastern issuer, but comes at a time of spiking convertible issuance among European corporates. DP World's debut convertible issue is expected to pay a coupon in a range of 1.5 to 2 percent…

North Sea Tanker Market Falls to Year's Lowest Point

North Sea tanker markets tumbled to a one-year low by the middle of this week and have since fallen further still, brokers said. "There was virtually no Aframax (80,000 tonner) enquiry in the North Sea," said London tanker broker Gibsons. The transatlantic trade from the North Sea also fell. Despite one promising mid-week million-barrel fixture by Ultramar at W120 ($1.10 per barrel), Exxon subsequently haggled the trade down to W110 ($1.01 per barrel) for a Mongstad to U.S. Gulf cargo. Brokers described the Caribbean market this week as "brisk", but rates remained stable at W182.5 ($1.30 per barrel). It was the Mediterranean market that provided the greatest volatility.

Ecopetrol Breaks Silence in Risk-on Day for LatAm Markets

A recovery in LatAm debt spreads opened a window for Colombia's Ecopetrol on Tuesday when it printed a US$1.5bn 11-year bond - the state-owned oil company's first debt issue in nine months. Optimism over Greek debt talks spurred risk buying on Tuesday, leaving LatAm debt spreads tightening against a weaker US Treasury market, and also benefiting the oil credit that has received a battering in secondary this year. "We are trading well today and are tighter across most credit spreads," said a New York based trader focused on Latin American credits. Even with Heinz's jumbo US$10bn multi-tranche deal in the US high-grade market, Ecopetrol came on a relatively quiet day in the primary market, leaving the runway open for the Colombian borrower.

'Buy' Rating Reiterated For Cruise Shares

Shares of cruise stocks, Carnival Corp. and Royal Caribbean Ltd., have traded down recently, with a sharp pullback following the recent release of the Consumer Confidence Survey. However, in a report released last week, researchers Lazard Frères & Co. said the shares are nearing an oversold level, representing an excellent buying opportunity, and reiterated their "buy" rating for both Carnival and Royal Caribbean. The Consumer Confidence Survey is a five-question survey that measures the level of confidence that individual households have in the performance of the economy. A composite index is created based on the responses. The source for the dip, the report says, was that the Consumer Confidence Index for September shows a sequential decline from August levels.

Finnlines Shares Plunge On Profit Warning

Shares in Finnish shipping company Finnlines plunged on Wednesday after it said 2000 profit would be worse than expected due to tough competition, higher oil prices and strikes hindering business. On Wednesday shares were trading down 12.5 percent at 23.99 euros, under-performing already soft Helsinki shares. In February Finnlines posted a 1999 profit before extraordinary items of 67.3 million euros ($64.46 million) and said the outlook for 2000 was uncertain due to factors such as tighter competition and a drop in import volumes. A strong imbalance exists between exports and imports of unitized cargo in Finland. Since the company has wished to maintain its export service at the level requested by its customers, no measures have so far been taken to reduce cargo capacity.

New Containership Arrested

Bondholders who financed the shipping company Enterprises Shipholding have "arrested" one of the company's newest containerships to force repayment of a $175 million junk bond on which it defaulted in June. The 25,900 gross ton Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. "The Ocelotmax was arrested to secure the bondholders' unquestionable right to judgement and payment of their claims against Enterprises," said a statement from the bondholders. The bondholders are largely U.S.-based investment funds, while Enterprises Shipholding is controlled by Greek shipping entrepreneur Victor Restis and is incorporated in Liberia.

New Containership Arrested

Bondholders who financed the shipping company Enterprises Shipholding have "arrested" one of the company's newest containerships to force repayment of a $175 million junk bond on which it defaulted in June. The 25,900 gross ton Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. "The Ocelotmax was arrested to secure the bondholders' unquestionable right to judgement and payment of their claims against Enterprises," said a statement from the bondholders. The bondholders are largely U.S.-based investment funds, while Enterprises Shipholding is controlled by Greek shipping entrepreneur Victor Restis and is incorporated in Liberia.

Declining Oil Output Attributed to Lackluster Tanker Stock Performance

Tanker stocks have taken a severe beating this month on declining oil output and global economic jitters, but several analysts are predicting a steady recovery and consider the slump a good buying opportunity. "Charter hire rates are expected to rebound steadily through 2001 as Iraq and OPEC increase oil production," investment bank Lehman Brothers said in a report on Wednesday. "Recent weakness in the oil tanker sector provides an extremely attractive entry point for investors," it added. Lehman Brothers underwrote a controversial tanker initial public offering last week of General Maritime, which was priced at $18 a share and has since traded down to a low of $12.90 a share on Wednesday.

BW Group Grabs Control of Tanker Firm DHT from Fredriksen's Frontline

File photo: DHT Holdings

Shipping tycoons Sohmen Pao, Fredriksen battle over DHT; Sohmen Pao's BW Group becomes top DHT owner with 33.5 percent to surpass Frontline as DHT's top shareholder. The move likely ends Frontline's ambitions to take over DHT, as DHT had twice rejected Frontline's advances. Privately-owned shipping firm BW Group became the top shareholder in tanker firm DHT Holdings on Thursday, in a surprise move that will probably end Frontline's ambitions to take full control of DHT. BW Group…

Oil Averages $18 In 1999

Oil prices in 1999 posted a 35 percent increase on average over 1998 in a triumph of output restraint by exporter group OPEC and key ally Mexico. International benchmark Brent blend for the year was averaging $18.00 a barrel near the close of business on the last trading day of the year. Brent averaged just $13.34 a barrel in 1998, the lowest in 22 years, when prices slumped amid global surplus caused by excess output and shrinking demand in collapsing Asian economies. Average prices for Brent were $19.34 in 1997 and $20.28 in 1996. "OPEC has succeeded beyond its own expectations in increasing prices and in reducing global crude inventories," said a report from Washington-based Petroleum Finance Company.

Washington State Ferries Ridership at a 15-year High

(Photo: Washington State Dept of Transportation)

Washington State Ferries, the nation’s largest ferry system, carried nearly 24.5 million passengers in 2017, its highest ridership since 2002. Ridership increased for the ninth consecutive year and was up by more than 250,000 over 2016. “We expect our ridership to continue to grow as more people move to Western Washington,” said WSF head Amy Scarton. “As part of the state highway network, the ferry system is a critical link between more affordable housing on the west side of the sound and key employment centers on the east side.

Konecranes-Terex Deal to Proceed as Zoomlion Drops Rival Bid

Photo: Terex Corp

China's Zoomlion Heavy Industry Science and Technology Co Ltd has abandoned its $3.4 billion bid for U.S. crane maker Terex Corp , clearing the way for a smaller deal between Terex and Finland's Konecranes. The decision comes after six months of merger talks between Terex and Zoomlion, and marks the latest setback to corporate China's ambitions to acquire U.S. assets. In March, Anbang Insurance Group Co unexpectedly withdrew its $14 billion offer to buy Starwood Hotels & Resorts Worldwide Inc.

Maritime Reporter Magazine Cover Dec 2017 - The Great Ships of 2017

Maritime Reporter and Engineering News’ first edition was published in New York City in 1883 and became our flagship publication in 1939. It is the world’s largest audited circulation magazine serving the global maritime industry, delivering more insightful editorial and news to more industry decision makers than any other source.

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