The tanker market has taken off in recent weeks, last week the spot rates in Aframax increased by 56%, VLCC increased by 71% and Suezmax was up 172%. The fundamentals of the tanker market are looking good, many suggest that tankers will be a “winners market” in the years to come. That being said, we acknowledge that this has a lot to do with the uncertainty surrounding further US sanctions against COSCO, where their fleet of 150 tankers could be taken completely out of the market. When you remove COSCO’s ship with NIOC’s ships it means that 10% of the VLCC fleet is taken out of the market. It is also rumored that US oil giant Exxon Mobil will not sail with ships that have unloaded / loaded around Venezuela over the past year. This stimulates ships of a fleet that already appear to be in some form of tonnage deficit. In other words many factors indicate that we are entering a new super cycle for the tanker market.
In addition, there are major delays reported at the shipyards, where the queue list for the vessels installing scrubbers has become longer as the installation process itself has taken considerably longer than previously assumed.
In other words, there is a tremendously tight supply across all the large tank segments, and combined with the refineries’ increased activity there is nothing to indicate that this will stop. In December of 2018, the Aframax spot market delivered $44,000 which was the highest level in several years, last week it averaged a full $51,265 before entering the real peak season. One-year time charter have risen from $21,500 a day to $ 26,500 per day from last week. Now it is only a matter of time before the vessel values really accelerate upwards.
Aframax – 12 TC: $ 26,500 per day
Aframax – Average spot market : $ 52,265 per day
Earnings have expanded widely across the dry cargo segments. A relatively tight supply in China (despite holidays) and higher demand on the Brazil-China route supported rates with a 14% increase in the Capesize segment, 6% in Panamax and 4% increase in Supramax. Demand for dry cargo optimism by day is growing demand especially in Asia, where China’s iron ore imports have not been as high as 19 months. At the same time, South Korea’s coal imports have risen significantly in Q3 this year after the first 6 months of the year were well below expectations. 1 year TC in Capesize has also increased marginally compared to last week.
Capesize 12 month TC : $ 20,375
Panamax 12 month TC : $ 12,750
The rapid increase in crude oil tanker rates has accelerated the second hand market again. An interesting momentum is the sale of the Japanese-built 2010 VLCC “Nagaragawa” at 299,994 dwt for $ 48m. At the same time last year, a nearly identical ship went for $ 41m. This indicates that the values have started to respond to the explosive increase in the rates.
There was also a 2001 built Aframax (Japanese) of 105,322 dwt which went for $ 12.5m before Ship Survey. The 18 year Survey usually carries a cost of between $ 1.5 – $ 3m.
2007 Panamax built of 76,598 dwt for $ 11.5m