General:
Owners’ confidence seems to be paying off on the period business and of course, it’s supported by a spot market that keeps on performing, especially on the product tanker side, while on the dirty tanker side Owners had to put up more of a fight to keep rates stable this week.
Looking forward, we are excited for the tanker market as we approach the autumn/winter and expect it to be the time for dirty tankers. With oil prices getting more comfortable under $100/barrel we also expect a natural increase in imports from countries who have been tapping from their inventories.
Chartering and Spot market
VLCC: The VLCC market is looking steady, and demand seems to be increasing. The AG is busy this week, while WAF is a little bit quieter than the week before. USG/UKC also increased a bit this week and we expect to see further increases on this lane in the near term.
SUEZMAX: The SUEZMAX segment is looking softer this week as both the AG and WAF is down, and it looks like the softening might extend into the coming week.
AFRAMAX: Activity in the MED was softer throughout the week forcing rates to feel a bit of pressure and a few ships to ballast to the USG for better returns. The North Sea looks somewhat similar to the week before.
LRs: LR2 Owners managed to keep rates at steady levels even though cargo volumes are down. On LR1 charterers, on the other hand, managed to keep rates steady as cargo volumes seem plenty and we are likely to see increases in the coming week.
MRs: The MRs are looking a bit better in the East this week after a period where rates were pressured a bit, especially in Singapore. In the West, the tide is slowly turning as the USG has been filled with sufficient tonnage and we now see a few ships heading toward Europe while the USG rates are correcting downwards.
Period market
The period business is looking firmer and seems to be breaking away from its parallel to the spot market almost, the confidence amongst Owners is clearly reflected in period rates, and it accounts for both dirty and clean tankers. We saw a few Afra fixtures at excess $30k/day from major traders, which shows profound confidence in this segment.
List of highlighted fixtures this week:
Second-hand market
A few regular weekly increases in both dirty and product tankers, but in general the market is getting more stable, and feel that we are seeing more sales at repeat levels, which could suggest that even though buyers are optimistic, they manage to keep asset prices stable for the time being.
List of highlighted transactions this week:
Newbuilding market
The focus was on smaller tankers this week with Singfar International ordering five firm 7,000 DWT LNG dual-fuel propulsion bunkering tankers at Lianyungang Shenghua which are scheduled for delivery in 2023. The agreement also includes five optional 7,000 DWT bunkering tankers.
Furthermore, it was confirmed that SC Shipping placed an order for two 11,300 DWT chemical tankers at Chongqing Chuandong which are scheduled for delivery in 2024.
The increase in orders over the past week comes after rising asset prices and a stronger belief that both product and crude markets will continue to be at elevated levels which could suggest that asset prices will increase even further, pushing owners to bet on newbuildings rather than modern tonnage. The market is already scarce for modern tonnage which could mean that we will see more newbuilding orders piling up in Q3 and Q4 2022.
Recycling market
Another week with mixed market sentiment and no recycling deals in the tanker segment to give us a better feeling as to where the true market is and to have a concrete benchmark shedding light on the current state of the market. There are a couple of factors affecting the market making it unclear to both Sellers, cash-buyers, and yards and the current ongoing LoC restrictions in Bangladesh and Pakistan aren’t making it easier for market participants to engage leaving India as the only hub able to recycle larger tonnage in the sub-continent.
The rates this week took a jump with Pakistan increasing a mere 1.8% settling at $560 per ldt, while India settled at $570 per ldt and increased 2.7% w-o-w. Bangladesh settled at $580 per ldt being the highest payer due to the complications of the Letter of Credits. Turkey settled at $250 per ldt and increased 4.2% w-o-w.
While we are still waiting for new benchmarks to give us a better understanding of the actual market conditions, we don’t anticipate seeing much activity throughout August due to the holiday season and generally less activity in August.
No recycling deals were reported this week.
Crude oil market
WTI Crude 88.83 -3.26 (-3.54%)
Brent Crude 94.88 -3.27 (-3.33%)
OX-Global Shipping Indices
The OX-Global WET12 index continues to increase amidst a general optimism amongst investors that crude and product markets will continue to increase leaving the listed companies with elevated profits and increased dividend payouts, which are considered a bullish sentiment that the listed tanker companies are doing well, and they too are optimistic about the short to mid-term outlook.
The index settled at $185.11 this week being up 6.4% and leaving the container and dry bulk index in the dust.
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