Shipping – Stories of Week 42

Crude Oil – Aframax charter rates on fire

According to Norwegian brokerage firm Arctic Securities Aframax charter rates have exploded this week, pushing average monthly rates up 158%. Aframax is often referred to as the “work horse” among tankers, as it’s the preferred vessel size for oil companies and refineries. The higher demand from refineries has moved charter rates above $30.000 per day in several areas this week, and the demand is expected to maintain on higher levels throughout the year.

This is good news for owners on the back of a long downward trend, and a quick recovery in the spot market is believed to push long-term contracts as well as vessel values in the right direction in near future.

The market fundamentals are stronger going into 2019 with rising oil output from OPEC in addition to higher US exports. Traditionally, OPEC exports benefits the larger vessel class VLCC and the US exports benefits Aframax/Suezmax. Hence, a recovery across vessel sizes which will lead the way for a long-term, sustainable recovery with better earnings and valuations is now expected.

Dry Bulk – Panamax rates at 5-year high

The past month has provided owners with a 18% rate surge amid strong Pacific coal transportation demand, as well as Chinese appetite for Brazilian soybeans.

Wednesday, the Baltic Panamax Index closed at 1.793 points – the highest level since December 2013.

China and India are pushing demand for coal, benefitting the activity in Pacific. Especially the Chinese authorities has become stricter on domestic production quality forcing consumers to look abroad for supply.

“India and emerging Asian (economies) coal imports will continue to grow” according to Thorvald Klaveness head of research, Peter Lindstrøm.

According to him the outlook for freight rates in 2019 is “largely positive”, and he pointed to the prospects of low fleet growth and a “positive outlook on grains”.