US STILLL SPOO OKS IRAN 31st October 20 014 While much of the wo orld’s atten ntion has b been defle ected awa ay from the e US and EU E ‘stand-o off’ with Iranian sanctionss, it appea ars that th he situatio on is unlike ely to disssipate soon. While the t ele ection of a more mo oderate Iranian presid dent in 2013 produce ed an imm mediate imp provement in relations, the e sanctions remain in n place. FFollowing the t start of o dialogue e and the relaxation of the e hard play by the e west, ma any experrts were fo orecasting g a reversa al to the pre-sanctiion relationship as the western powe ers appea ared to be more focused on th he situation in Northe ern Ira aq and Syrria as well imposing further f san ctions aga ainst Russia a. Iran wass very muc ch pushed off of the front pages unttil earlier th his month. In early October O Iran once ag gain refuse ed to answ wer qu uestions fro om the Inte ernational Atomic En nergy Age ency (IAEA) on its nu clear prog gramme. Irran ha ad previously agreed d to resolve e “practica al measure es” with the agency by August 25th, ahead of the latest round of peace tallks which w were scheduled for mid-Octob ber in Vien nna, but no ow de eferred to llate Novem mber. On ne item tha at impactss on the ta anker markket is the European Union U allow wing sanctions on Iran’s ma ain owner NITC to la apse follow wing court ruling in July that orrdered the e measuress to be lifte ed. NITTC has alw ways conte ested the EU’s E blacklissting arguiing that the compan ny is private ely owned as op pposed to o a govern nment controlled e ntity. No appeal a was lodged d by the EU and th hus ally suspen sanctions we ere annulle ed at the beginning of Octob ber. Rulings are typica nded for tw wo mo onths pend ding appe eals. While this ruling w will allow NITC N to resu ume norm al relationss with the EU, sanctions wiith the US remain very much in place. This will mean m thatt NITC will continue to strruggle to o obtain insu urance cov ver, but pe erhaps mo ore significantly acce ess to ban nks and oth her related serviices. EU pa arties dealling with N NITC may also a be exposed to ssome kind d of backla ash fro om US auth horities as a consequence, so th here is still reason to tread t with caution. It is p perhaps iro onic that the t recen nt weakne ess in world oil dema and may in fact ha ave a big gger influen nce on Iran’s abilityy to exporrt its precio ous crude e than th he impositiion of th he 2012 sa anctions. On O severral occasio ons there has h been n evidenc ce of VLC CC tonna age waitin ng for lengtthy perio ods off of the Iraniian coastt and not employed d in permane the ent storage progrramme. However, H Irran conti nues to export e larrge quan ntities of crude to China a, with lessser amounts to Ind dia and So outh Korea as we ell as Suezm max cargo oes discharrged into M Mediterran nean locations. The n next deadline for a de eal on n the nucle ear programme is No ovember 24 4th. It is posssible that if the Irania an regime continuess to test the US g governmen nt’s resolve e to end itss nuclear programm p me, more p pressure willl be heap ped up pon those importers to t eliminate e their purc chases in favour f of other o suppliiers. CRUDE Middle East_________________________ After a slight firming at the end of last week, VLCC Charterers decided to kick the week off by showing several cargoes early doors, and Owners politely responded by putting their rates up. This continued for most of the week and rates were particularly helped by several tricky 'all options' cargoes, and also it has to be said the new Frontline/TI link-up is helping to build Owners' confidence. The week has ended a little more quietly hovering in the high ws 50's for East and low 30's for West, but with the combination of several other factors such as the December West Africa programme, Atlantic VLCCs stronger, and other sizes stronger especially Suezmaxes in the AG, things should continue to be challenging for Charterers in the week ahead. AG Suezmaxes have seen very strong enquiry this week, and with a lack of tonnage that has been going to Asia recently there is real hope that this will become more than just a backhaul voyage. The week ended with rates upto ws 60 West and mid ws 90's East. Aframax rates continued to rise with 80,000 by ws 110 being paid, with potential for further gains next week. West Africa_________________________ Suezmax rates have gone from strength to strength thoughout the week, with each day passing Owners obtaining higher levels. The week is ending on an active note with many cargoes remaining uncovered and Owners looking to push rates above 130,000 by ws 80 for European discharge. Although VLCC's saw little enquiry, there has been plenty of fixing from all the other areas including Brazil, Caribbean, North Sea and even Sidi Kerir, acting like an ambush on West Africa which could drive those rates up as the December programme is attacked over the next few days. On the flip side, Owners may view that a long voyage at these levels in the high 50's could be quiet attractive, especially at the new lower bunker prices. Mediterranean____________________ A productive week for Aframax Owners. A succession of Libyan stems coupled with some ports not processing ships as quickly as usual (Trieste, Genoa) led to tonnage growing thin and charterers paying above last done with each fixture. The 2 digit fixtures of the beginning of the week soon became a distant memory as ws 107.5 and then ws 120 being done for X-Med voyages. Potential for higher rates today and the longer term picture however will no doubt see rates settling as the calm comes after the storm. Suezmax Owners have watched West Africa for inspiration which has moved along albeit slowly. Towards the end of the week several Mediterranean cargoes emerged at improved levels of 135,000 to Med at ws 87.5 and 130,000 for a longer haul to EC Canada at ws 62.5. Caribbean_________________________ The Caribbean and Brazil areas saw continued strong VLCC enquiry and each fixture just saw a nudge further up, ending the week at $6.25 million for a voyage to Singapore. With a tight position list going well into December there is little to suggest that rates will not continue to climb further. Aframax rates quickly strengthened in the early part of the week and rates peaked at 70,000 by ws 165 upcoast. Activity then evaporated and a downward correction in rates is anticipated. North Sea___________________________ The North Aframax market found itself in a precarious situation this week, with Charterers finding cargoes tricky to cover. On the surface the tonnage lists appeared balanced; but when you dug a little deeper and a mix of uncertain itineraries, ships being swallowed into their own programme, an increase in the fuel oil and a general resistance to fix certain cargoes by Owners resulted in the firm market that we saw. Rates held at 80,000 by ws 102.5 for North Sea voyages and the Baltic moving up from 100,000 by ws 72.5 at the start of the week to 100,000 by ws 85. Suezmax rates have remained unchanged throughout the week with Owners willing at ws 52.5 for States discharge. Like elsewhere in the Atlantic, VLCCs just continue to rise with each fixture, and $5.25 million was reportedly fixed for Rotterdam to Singapore. The next one could be higher again. CLEAN PRODUCTS East______________________________ LRs have had a very exciting week with LR2s in particular taking the lead and seeing a sharp upturn. LR1s are sure to follow through with plenty of cargoes still remaining uncovered. 75,000 mt Naphtha AG/Japan is up to ws 135 and 90,000 mt Jet AG/UKC is $3.1 million. These rates should remain steady for now with Owners just locking in the profits. 55,000 mt Naphtha AG/Japan is at parity at ws 135 levels and 65,000 mt Jet AG/UKC is $2.4 million but still firming. This firmer patch looks likely to be maintained for the remainder of the year. The MRs have had a week of consolidation, rates remain firm, but activity hasn't been as prolific and hence some deals have been done at less than last done. TC12 is fixing at ws 120 -125 levels and looks quite steady, however with LR's both in excess of ws 130, surely TC12 should also firm. East Africa has seen a wide spread with ws 195 on subs, but 15 points less also going on subs subsequently. Certainly not every boat is there to repeat ws 180. AG to UK Continent is fixing at $1.75 million. The short haul's remain very firm, with X-AG voyages fixing $330-350,000. The list remains reasonably tight and given the splurge of activity on the LRs, MR Owners will be hoping that cargoes get split and thus bringing further cargoes to the market. In general, rates are steady and with continuing low bunker prices, Owners are contented. Overall, the North Asia MR market has had another relatively steady week, although for the most part, the position list versus the distribution of cargoes has been in imbalance. The prompt position has looked more exposed with ample available tonnage, whereas there have been a good amount of cargoes during the midNovember window, and last done has reportedly been beaten off these dates. Overall though, the two date windows counterbalance each other and Korea/Singapore is fairly steady at around $500Kt levels on the MRs. It is a different story on the LR1 and LR2s, where the firmness of the Middle East market means that most Owners will decline a backhaul unless the returns are fruitful. LR1 Owners will now be gunning for above $600Kt for Korea/Singapore and although last done on the LR2s was $625Kt, most Owners will not do the backhaul at these levels now. Singapore on the MRs is quiet, and although the AG is firm, the `pullfactor’ from the TC12 market is not strong enough to detract enough tonnage from the area to allow rates to firm. Singapore/Australia should fix at 30kt x ws 177.5 levels and looks steady. Mediterranean____________________ More hustle and bustle in the Mediterranean market in week 44, with the front half of the week a real scramble for ships especially in the East Med and Black Sea. The market rates have oscillated as a result, with highs of 30 x ws 240-265 reported on subjects from Black Sea (both failed) but most fixtures confirmed in the 30 x ws 200-210 bracket. The end of the week has been much calmer and the market particularly in the West Med feels softer, however the market direction depends very much on how busy the East Med/Black Sea market will be over 10-15 November window. The MRs have had a rather slow week in terms of natural 37kt stems, but many Owners have been interested to fix short on 30kt clips given the current highs. Longhaul rates have slipped slightly though and now considered 37 x ws 140 Transatlantic / 37 x ws 160 West Africa / $900-950Kt Red Sea. UK Continent_____________________ A touch quieter on the Cont this week, with 37 x ws 150 finally being broken yesterday and now MRs trading at ws 140 for Transatlantic. West Africa has also slipped in line to ws 160. Handies and Flexis are very firm, a combination of product discharging delays and continued activity has formed a very tight supply of ships pushing rates North to 30 x ws 195 and 22 x ws 215. LR1s have been fixing and failing all week, but with a steady flow of enquiry in the market and an active Black Sea and Med market, the list now looks very tight for the next few weeks and 60 x ws 117.5 on subs. LR2s remain extremely tight off the Cont, $2.7-8 million Med/East although limited options after so many vessels have gone East. Caribbean________________________ A quieter week in the USG as cargoes started to stall in the market and Charterers began putting pressure on rates. TC14 has softened as a result to ws 90 levels, and again has been a quiet route. Most activity trades down to Brazil with the Petrobras refinery reportedly in maintenance, with 38 x ws 150 the conference rate. DIRTY Y PRODUCTS Handy______________________ _________ __ Ground has co ontinued to o be made by Ownerss this wee ek on where e some may y say the market should d be by this time of tthe year. nean market has ben nefitted fro m a The Mediterran couple of late running ships and aw wkward carg goes to cover, c and Owners have been able to p ut a prem mium on their ships witth a firm itinerary. ENI o once aga ain has had d fun covering a Kavka az stem off 8-10 with h some Own ners trying th heir luck witth exponen tially high h offers. A As the wee ek comes to a closse a stale emate has been met,, and who gives in firs t will dec cide where m market rate es are. t Contin nent, an equally e stro ong week has In the passsed. Althou ugh rates haven’t h jum mped quite e so muc ch as the Mediterra anean, the feeling o of a stron nger, bette er built rise e on rates is there. With alternative sized tonnage picking up the pace also, ering expect a few more “splitt” cargoes to be ente nd putting pressure on o natural 30kt the market an ms. All eye es peeled for the to onnage listss on stem Mon nday. MR R________ _________ _________ ________ A change c of market m stre ength in the e Continentt this wee ek where Owners m anaged to o maximise e on opp portunities with w reports of 45x ws12 20 being fixe ed in the region. The e reasons ffor this hav ve been drriven pure ely by the limited nattural tonnag ge in the area, a unlik ke the Med diterranean where the lucky few have h man naged to find a full sizze stem thiss week. Loo oking forw ward into ne ext week th he build-up p of tonnag ge in the region starts again w we could well w see Ow wners with h West Med positions co onsidering the t ballastin ng to the UKC, otherrwise a closse eye will be kept on n the firming handy market to ffind employ yment. The 30kt stem ms will keep things interresting. Panamax__________________ __________ With h strong Caribbean ma arkets pinning vessels back b from m the ballast over, Owners’ opportunitie o es to con ntinue to prress last don ne increase es. The flexiibility of sttems will be e put to the e test and with w such lim mited ava ailable tonna age, barrellling up to th he Afra or la arger will be a valid escape ro oute, as lon ng as the West W ast option is not requiired. Monday morning g will Coa show w the true strength s in this markett, and if we find oursselves with a quiet Frid day, promp pt tonnage may startt to questtion how determined d they are e to improve on lastt done. Onlyy time will te ell. Dirty Tanker Spot Market Developments - Spot Worldscale wk on wk Oct Last Last FFA change Week 45 Month 40 Q4 14 52 AG-Japan TD3 VLCC TD20 Suezmax WAF-UKC +15 30th 60 +11 78 67 79 82 TD7 Aframax N.Sea-UKC +5 105 100 98 109 Dirty Tanker Spot Market Developments - $/day tce (a) wk on wk Oct Last Last FFA change Week 29,000 Month 18,750 Q4 14 37,000 AG-Japan TD3 VLCC TD20 Suezmax WAF-UKC +19,500 30th 48,500 +6,750 30,000 23,250 27,750 33,000 TD7 Aframax N.Sea-UKC +3,750 23,750 20,000 16,250 25,000 Clean Tanker Spot Market Developments - Spot Worldscale wk on wk Oct Last Last FFA change Week 115 Month 100 Q4 14 AG-Japan TC1 LR2 TC2 MR - w est UKC-USAC +20 30th 135 +5 146 141 143 115 AG-Japan TC5 LR1 TC7 MR - east Singapore-EC Aus +5 134 129 112 118 +1 180 179 182 Clean Tanker Spot Market Developments - $/day tce (a) AG-Japan TC1 LR2 TC2 MR - w est UKC-USAC AG-Japan TC5 LR1 TC7 MR - east Singapore-EC Aus wk on wk Oct Last Last FFA change Week 28,250 Month 19,000 Q4 14 +9,250 30th 37,500 +1,000 16,500 15,500 13,750 9,750 +1,000 23,500 22,500 15,250 19,000 -1,000 16,750 17,750 15,250 (a) based on round voyage economics at 'market' speed (13 knots laden/12 knots ballast) LQM Bunker Price (Rotterdam HSFO 380) +1 458.5 457.5 542.5 LQM Bunker Price (Fujairah 380 HSFO) +5 487.5 482.5 562.5 LQM Bunker Price (Singapore 380 HSFO) +14 479 465.5 555 PAT/SMW/JD/OD/SLK Produced by Gibson Consultancy and Research Visit Gibson’s website at www.gibson.co.uk for latest market information E.A. GIBSON SHIPBROKERS LTD., AUDREY HOUSE, 16-20 ELY PLACE, LONDON EC1P 1HP Switchboard Telephone: (UK) 020 7667 1000 (International) +44 20 7667 1000 E-MAIL: [email protected]: 94012383 GTKR G FACSIMILE No: 020 7831 8762 BIMCOM E-MAIL: 19086135 This report has been produced for general information and is not a replacement for specific advice. While the market information is believed to be reasonably accurate, it is by its nature subject to limited audits and validations. No responsibility can be accepted for any errors or any consequences arising therefrom. No part of the report may be reproduced or circulated without our prior written approval. © E.A. Gibson Shipbrokers Ltd 2014.
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