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Confidence is key: We have seen rates fluctuate tremendously over the last year or so, with both Crude and Clean tankers reaching some of the highest sustained levels seen, often followed by moments of downturn before again getting back on the upwards trajectory.

21. May 2023 – RESEARCH
The ability of the tanker market to recover and find new strengths in the spot market continuously over the past year has given second-hand buyers a new-found confidence pushing second-hand prices to new heights. As evidenced by the clean tanker segment which is at a point of downturn on the spot market as rates globally have dropped noticeably over the last few weeks, yet we have seen second-hand prices moving
upwards. The underlying source of confidence in the mid/long term tanker market correlates to the existing geopolitical changes in the trading world, and the considerably low order book compared with the increased tonne-mile demand from longer trade lanes and the actual higher oceangoing crude and products volume.

DPP/CRUDE:
Not a surprising week for VLCC’s, rates are slowly but surely increasing as we have seen in MEG where rates gained a few points w-o-w with room for more improvement as the market seems set for a bullish week. The Suezmax market continues to push forward as rates climbed this week. As mentioned in the week prior, the main bearish driver is the
involvement of VLCC’s when the Suezmax market reaches certain levels, and sure enough, we are starting to see some of the VLCC crossovers affect the Suezmax’s in USG. The AG continues to be a strong area while WAF is starting to look a bit more questionable, yet overall the Suezmax segment performed very well this past week. The Aframax market seems well positioned for a bullish run, and Owners in the MED and USG have been trying to make it happen, but without success this past week, rates and volume remained steady, and Owners should begin testing charterers in the coming week.

CPP/PRODUCT:
The Clean market is battling some heavy winds at the moment and the LR’s included. Looking at the usual AG/UKC fixtures not much is getting done, and a lot of the ships looking to go west are naturally looking for this voyage to return to Russian business, which allows them to consider a certain discount, currently ideas for AG/UKC are around mid 3mill. The gap between LR1’s and LR2’s are inching closer as demand for LR2’s has seen a larger drop, while LR1 Owners have been resisting charterers’ attempts to push lower, by the end of the week there was only a few 100k apart between LR1’s and LR2’s on AG/UKC. We trust and hope that MR’s have reached the so-called bottom as the market w-o-w was very flat with rates not moving too much, which could be a good sign as we know charterers will naturally try to push the market lower. In Asia where it’s been quiet lately, we did not see much change this week as activity out of China is not performing fantastic. Southeast Asia did fine with Singapore looking fairly active with a shorter w-o-w tonnage list leaving the remaining prompt options more expensive for charterers. Not much to report from the AG or USG this past week.

TIME CHARTER MARKET:
We continue to see a stubborn period market pushing for higher rates while the spot market continues to be affected by negative sentiment. There are still charterers out there who are willing to fix the above last done in order to secure the tonnage for a year or two but we also see charterers who are squeezing the owners to accept lower rates – it’s either employment in the spot market for now and taking a bet for better earnings in the very short outlook or locking in the rate with a firm 1 or 2 year period time charter. We are still seeing firm numbers being negotiated and owners not willing to settle for any less than the last done. Even though we are seeing some changes in the spot market compared to the last previous months, the optimism in the period market seems to not have been affected as some strong rates continue to be reported, for example, BP just having secured the BW FALCON at $30,000 pd for 2 years firm time charter. The number of fixtures we are seeing is becoming scarcer as a lot of vessels have been taken out of the world market and employed in Russian trades making it more difficult to secure tonnage at lower rates for charterers, but on the other side, we are seeing more unconventional Buyers stepping up and making an entry in the tanker market with new purchases and ability to support the demand side.

SECOND-HAND MARKET:
The number of willing Buyers continues to push asset prices upwards regardless of the spot market as we are seeing more buyers entering
the owner side with long-term plans to utilize the current market situation with uncertainty being the main factor fuelling the buying interest.

NEWBUILDING
Some activity this week in the MR2 segment with Hyundai Mipo having reported a contract for two firm 50,000 DWT MR2 tankers from a private buyer. The vessels are slated to be delivered throughout the second half of 2026 in Vietnam. While we are seeing some more activity on the tanker newbuilding side we are still far away from what would be considered a healthy supply of new vessels into the market for the next few years. On the MR2 segment, we are seeing an order book of 8.4% compared to the existing fleet which will be delivered throughout 2023-2026 with the majority of the vessels being delivered in 2025 equalling a total of 3,040,000 DWT or 61 vessels. With 216 MR2 vessels being 20 years old or above currently in trading equalling a staggering 9,865,000 DWT the 2-3 year outlook could suggest that we will see far more vessels being sent for recycling or being employed in sanctioned trades while the supply will be a third of that number meaning that there will be a difference of 2/3 until 2027.

RECYCLING
Not much fun in the recycling market this week with no reported tankers being sent to the yards and the market has not changed throughout the last week. In the next couple of months, we expect the number of vessels being scrapped to be at very low levels due to the summer period and continued lucrative tanker market.

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