John Fredriksen says tanker prices will crash during the next couple of years and he is looking to use that window to expand his fleet.
Clarksons presently values a five-year-old VLCC at $83m, down from $104m at the end of 2008. According to Fredriksen, however, the greater fall is yet to come.
It will be within “a year or two” that the market “collapses”, he said in an interview with Bloomberg.
Fredriksen will then look to pick up vessels at a discount, the newswire says.
The report emerged only a couple of weeks after
Fredriksen’s closest aide Tor Olav Troim also predicted a lot of pain ahead for the VLCC market. He quipped shipping is facing its worst period since the Black Death.
Buying prices for new panamax commodity-hauling ships will drop 10 percent by the end of next year as slumping charter rates curb owners’ vessel purchases, said Maritime Strategies International Ltd.
Prices will “trough” in 2012’s second quarter and be at $30 million by the end of the year, Adam Kent, a director at the freight forecaster, said during a conference in London today. That compares with around $33 million to $33.5 million now, he said.
There are 648 panamaxes on order at shipyards worldwide, equating to 34 percent of the trading fleet of 1,886 vessels, according to data from Clarkson Research Securities Ltd., a unit of the world’s biggest shipbroker. Charter rates for the vessels provided by the Baltic Exchange have slipped 2.3 percent in 2011 after falling 49 percent last year.
South Korean shipbuilders are overwhelming Chinese rivals in new ship orders this year.
Since the turn of this year orders for high-value ships such as ultra-large containerships, drillships and LNG carriers are leading the world newbuilding market and South Korean shipyards are winning most of the orders.
But amid slump in bulkder and tanker market, Chinese yards are facing reduced new orders compared to last year.
According to recent data from Clarksons, South Korea won new ship orders for 1.48m cgt (37 ships) in May, occupying 65.3% of the global total of 2.27m cgt while Chinese secured just 0.3m cgt (17 ships), taking 13.2% of the total.
During January-May, South Korean yards won 6.48m cgt (171 ships) while Chinese inked 3.4m cgt (178 ships). South Korean took 54% of the global orders for 12m cgt in the period while Chinese catched 28%.
By order value, South Korean builders signed $4.16bn orders in May while Chinese penned $450m. During the first five months South Korean secured $23.4bn while Chinese won $5.9bn.
South Korean yards are expected to continue to win high-value ship orders going forward while Chinese are forecast to win less new orders for a while, and South Korea is highly likely to get back to the No. 1 spot by new orders this year.
Owners of large bulkers are queuing up to sell their vessels for demolition as prices remain firm.
Another four capesizes, including two smaller ships, have been sold for scrap during the past week.
Cosco of China has reportedly sold the 132,000-dwt Jimrich (built 1982) for recycling in Bangladesh for $508 per ldt or $8.8m.
The ship last changed hands for $17m in 2004. Last month, Cosco sold both the 177,000-dwt Sealink Majesty (built 1982) and 170,000-dwt Jia Fu Star (built 1985) for demolition.
Far Eastern players dominate on the owner side of the scrapping scene. Highly diversified Today Makes Tomorrow (TMT) appears to be exiting the investment of a converted aframax tanker that will not go down as the company’s best deal. The 100,000-dwt bulker Iron Monger 6 (built 1990) is said to also have been sold into Bangladesh for $512 per ldt or $8.8m. TMT bought the ship as Rose from Dynacom in 2007 for $30m plus conversion costs.
The Ofer group has again jumped on the scrap bandwagon, with the reported sale of the 151,000-dwt Cotswold (built 1986). The vessel has gone to Bangladesh for $522 per ldt or $12.7m. In January, the group sold the 142,000-dwt Kyushu Star (built 1982) for demolition.
Another Chinese player, Fujian Ocean, has sold the 107,000-dwt Zheng Feng (built 1986) to China for $452 per ldt or $8.1m.
These four sales lift the number of capesizes sold for recycling this year to 41.
S & P
Not much to report this week.
In the Capesize sector, two sales have been concluded. We understand that S. Korean interests have purchased (subject tender) the M/V JULIAN N (149,391 dwt 1993 blt CSBC) for US$ 16.4m. In addition, the NYK-controlled capesize M/V SUZAKU (148,535 dwt 1994 blt Samsung H.I.) has been sold at US$ 15.5m to Chinese buyers.
An active week for the tanker S&P market.
The VLCC M/T VENTURE SPIRIT (298,330 dwt 2003 blt Universal Shipbuilding Japan) reported sold to Greek buyers for US$ 65m.
To another sale clients of Torm have sold the M/T TORM MARGRETHE (109,637 dwt 2006 blt Dalian) to First Ship Lease Trust (FSLT) for US$ 46m. Upon delivery Torm will take the vessel back on bareboat charter for a seven year period and is structured with recourse to Torm and contains: a purchase option at the expiry of the charter, an early buy-out option on or after the fifth anniversary of the lease term, as well as three extension options of one year each.
The ex Korea Line controlled M/T BLUE JADE and M/T BLUE EMERALD (51,246 dwt 2009 blt STX)
were this week sold at judicial auction (in California and Texas respectively) to clients of Kirk Kapital for US$ 35.2m.
As we approach the middle of 2010, the Yards will no doubt be looking back on the year thus far, with the larger Korean Yards likely reflecting on how well or not they have done against their annual targets.
Currently it is Samsung who lead the way in terms of meeting their targets, which is due to their continued success in the LNG, offshore and container markets. Reportedly they have already won orders amounting to over 90% of their annual sales target. HHI, DSME, STX and SPP are also reported to be well on the way towards reaching their targets and Sungdong have been reported to increasing their target by more than 40%, after a successful start to the year.
As previously reported, this sadly is in stark contrast to some of the smaller yards in Korea, who have somewhat struggled to win new business in their preferred areas of smaller bulkers and chemical tankers due in part to a much slower market and stiff competition from their Chinese counterparts. It will be interesting to note how the second half of the year pans out for these smaller yards!
In terms of reported business; In Dry, Centrans Ocean are reported to have ordered a series of 10 x 76,000dwt Panamax bulk carriers at Rongsheng H.I. with the vessels due to begin delivering from End 2012 onwards. Meanwhile Samjin are reported to have won an order from an unknown Korean Owner for 2 option 2 vessels of their 58,000dwt design with deliveries scheduled from End 2012 and into 2013.
In Wet, Clients of Thenamaris are reported to have signed for a series of 4 x 51,000dwt MR tankers with the vessels due to deliver in 2H 2012 and 1H 2013. Norden are also reported to have signed with STX, ordering 4 firm units of 49,600dwt and a further 2 options, with the firm vessels due to deliver in from 1H 2013 onwards. Knutsen NYK are reported to have ordered one additional 123,000dwt Shuttle tanker at Hyundai H.I. due to deliver in Sep 2013. In addition, Palmali Shipping have ordered 5 x 7,050dwt Product tankers at Besiktas Shipyard in Turkey delivering from Early 2013 onwards.
Finally in Gas and other sectors, Dynagas have ordered 2 option 1 x 155,000Ccbm LNG Carriers at Hyundai H.I. with the firm units due to deliver in 2013. Sovcomflot meanwhile have ordered 2 option 2 x 170,200dwt LNG Carriers at STX Shipbuilding with the firm vessels due for delivery in 2013 and 2014 respectively. Finally P&O Cruises are reported to have placed an order at Fincantieri for one 141,000gt Cruise Ship due to deliver in 1Q 2015 at a reported price of USD 805 Mill.
South Korea’s shipbuilding industry continues its strong performance in the global market as Korean shipbuilders including Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and STX Offshore & Shipbuilding have successfully won large-scale orders.
HHI announced it received a $1.12 billion order for two units of drillship from Houston-based drilling company Rowan on May 31st, local time. HHI is showing the greatest performance among drillship builders as it has, so far, received orders for nine drill ships in total, amounting to $5 billion. “HHI has won shipbuilding orders worth a total of $11.7 billion as of May, accounting for 60% of the company’s goal to achieve $19.8 billion this year,” an official from the company said.
STX Offshore & Shipbuilding inked a deal with Russia’s Sovcomflot to build two LNG carriers worth $400 million on May 31st. The two companies signed an option that STX will build two more carriers afterwards. As a result, the total contract swells to $ 800 million. The company also clinched a deal with Denmark-based Norden Shipping to construct four units of 50,000-ton petroleum carrier. The $150 million deal includes an option for building two additional carriers.
Earlier, SHI concluded a 3.2 trillion won ($2.98 billion) LNG-FPSO (floating production storage and offloading) deal with Royal Dutch shell at its Geoje Shipyard on May 30th. SHI has won orders for six large LNG carriers as of now, exceeding $10 billion in order value.
Despite the negative freight market trends, the secondhand ship purchasing activity remains at similar with last week’s levels. Overall, the week ended with 31 transactions reported in the secondhand and demolition market, while the highest activity has been recorded again in the newbuilding market with 72 new contracts reported worldwide.
In the secondhand market, 22 vessels reported to have changed hands this week at a total invested capital in the region of US$299 million, with 6 transactions reported with undisclosed sale price. In terms of the reported number of transactions, the S&P activity has been marked with a 10% positive w-o-w change, while is down by 15.3% comparable with previous year’s weekly S&P activity when 26 vessels induced buyers’ interest with bulk carriers and tankers grasping 60% share of the total volume of S&P activity. In terms of invested capital, the most overweight sector for this week is the tanker segment grasping 51.26% of the total amount of money invested.
In the newbuilding market, the week ended with 90% increase of newbuilding business in the bulk carrier segment with vessels of all sizes being on the spotlight, from very large ore capes to handysizes. The week ended with 72 orders reported in total, equalling a total deadweight of around 5,5 mil tons at a total invested capital of region $4,5 bn, 60% of the total number of newbuilding transactions reported with undisclosed newbuilding price. In terms of invested capital, the most overweight segment appears to be the offshore and container segment, even the irrational bulk carriers’ ordering spree, grasping around 50% of the total invested capital this week. At a similar week in 2010, the newbuilding activity was down by 10% than current levels with 80 new contracts to had been reported worldwide and bulk carriers winning 60% share of the total volume of reported contracts
In spite of bulk carriers grasping the highest share of this week’s newbuilding business (40%), shifting ordering trends towards offshore, container and gas tanker segment are still visible.
In the tanker sector, the MR size has started to become very fashionable investment recently supported by strong freight rates. Following Scorpio Tankers and Thenamaris MR orders, this week Denmark’s Norden is said to have placed an order for up to six 49,600 dwt product tankers and India’s Great Eastern Shipping an order for up to four units, both in South Korean yards. However, this ordering spree is not so rationale given the impact of the current orderbook level on the just buoyed freight market.
In the gas tanker sector, ordering activity is buoyed these days with more deals coming to light every week. South Korea’s Hyundai Heavy Industries has announced that it won orders for up to three 155,000 cu.m liquefied natural gas carriers for Greek owner George Prokopiou’s Dynagas LNG Outfit at an estimated price of region $200 mil per ship. In addition, the Greek gas shipping arm “Maran Gas Maritime” of Angelicoussis Group, which have already converted an order of three VLCC’s into contracts for 160,000 cbm LNG carriers, is planning to invest a further $1,6bn on a series of LNG carrier newbuildings in yards of South Korea, Hyundai Heavy Industries and Daewoo. Finally, Russian owner Sovcomflot is said to have placed an order for a pair of LNG carriers in the South Korean yard STX Offshore and Shipbuilding for delivery in the fourth quarter of 2013 and the second quarter of 2014 respectively. This order is believed to be the first for the gas hungry South Korean yard since 2007. It seems that Germany’s decision to exit from the nuclear power sector and Japan’s nuclear power plants meltdown has increased the interest in the segment.
In the demolition market, the appetite for capesize scrapping tonnage seems to have no end as prices are keeping firm. India seems to have fulfilled its scrap yard capacity and Bangladesh has stepped in to bid a large share of the market till the beginning of July. However, China is believed that will firm even more its position during the monsoon period by securing more scrapping tonnage at higher offered prices. Scrap rates are still holding strong comparing to last years levels, with demo countries offering $100-$150/ldt more for dry and wet cargo. Bangladesh appears to offer firmer prices than India, while China still tries to narrow the price differential gap among Bangladesh and India.
The week ended with 18 vessels reported to have been headed to the scrap yards of total deadweight 939,983 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 5.8% week-on-week increase, while in terms of total deadweight sent for scrap there has been an impressive 23% decrease. In reference to scrap rates, the highest scrap rate has been achieved this week in the bulkcarrier sector, by Bangladesh for the 236,697 dwt “HEBEI INNOVATOR” at $ 530-535/ldt. India and Bangladesh compete on the acquired tonnage by attracting the majority of fresh reported deals, since some older demolition sales came to light. Comparing to last year’s similar week in 2010, demolition activity was at lower levels in terms of the reported number of transactions, where 10 vessels had been reported for scrap of total deadweight 292 mil tons with liners winning 40% share of the total volume of demolition transactions and India offering the highest levels $350/ldt for dry and $380/ldt for wet cargo.
The Greek presence was at low levels again this week in terms of number of transactions. In the newbuilding market, Greek presence was noticed in the dry sector with the order of one kamsarmax vessel and in the gas tankers sector with two orders for 155,000cum from Dynagas, In the secondhand market, Greek investors appeared to be behind two S&P tranactions, one in the handymax bulkcarrier sector and one in the handy container sector. The total invested capital is calculated to be in the region of $400mil for the newbuilding investments (while the contract price of the bulkcarrier has not been revealed) and $ 15 mil for the investments in the secondhand market.
Competition from China and Japan has hardly been a threat to Korea’s surging shipbuilding sector so far this year. Many Korean shipbuilders are on pace to easily surpass their annual targets.
Hyundai Heavy Industries, the world’s largest shipbuilder, is leading the group with 44 ships and offshore plants in the books this year totaling about $11.7 billion, including the announcement yesterday that it had won a $1.1 billion order to build two drillships for Rowan Companies.
Having already clinched orders for nine drillships worth $5 billion - plus an option to build three more - Hyundai sits at the top among shipbuilders for the most drillship orders in the world. And with high-value deals such as liquid natural gas carriers and offshore plants, the company has already reached 60 percent of its $19.8 billion target for the year.
“With continuously rising international oil prices recently, more investments are being made in resource development,” said a Hyundai Heavy official. “The interest in oil-field development is shifting offshore, and we believe that the increasing need for drillships will continue.” Samsung Heavy Industries, the second largest shipbuilder in the world, is even further along in attaining its orders target this year. A recent $3 billion order to build a LNG-FPSO (Floating, production, storage and offloading units) from Royal Dutch Shell, the world’s largest energy company, has pushed it to 91 percent of its 2011 target. It has added $10.5 billion in orders so far this year.
The third of Korea’s big three, Daewoo Shipbuilding & Marine Engineering, is also well on its way to meeting its 2011 target. It has won 16 orders amounting to $4.3 billion so far this year. At this time last year, the company had only booked $1.6 billion in orders.
STX Offshore & Shipbuilding, which made a slow start to the first quarter, clinched a $550 million deal yesterday for two LNG carriers from Russia-based SCF Sovcomflot and four petroleum carriers from Denmark-based Norden Shipping. Officials are viewing the firm’s $5 billion target positively.
“Momentum is positive as Korean shipbuilders lead in orders this year. Most orders are concentrated in LNG carriers and offshore plants, instead of small ships and bulk ships, for which competition is tight with the Chinese,” said Yoo Sung-mo, an analyst at Shinhan Investment and Securities.
“The technology and experience involved in LNG and offshore is something that Chinese companies can’t compete with us on, and Korea has price competitiveness with the Japanese,” Yoo added.
Yoo said Germany’s decision to shut down all of its 17 nuclear reactors by 2022 will increase demand for LNG and orders for ships will increase, which he predicted will benefit Korean shipbuilders.
Yoo, however, predicted a slowdown in orders in the summer months.
He also said that container ship demand is not doing well, but he predicted demand will revive towards the end of this year and beginning of next year.
In late 2007, following an unprecedented ordering boom, the orderbook for very large gas carriers (VLGCs) of 70-85,000 cubic metres stood at 51 vessels. At the time there were only 112 VLGCs in service but the promise of a surge in Middle East LPG exports prompted gas carrier owners to throw caution to the wind and embark on their newbuilding spree. The paucity of shipyard building berths slots at the time exacerbated the rush to contract new vessels.
As has often happened in similar situations in the past, the bubble soon burst. On this occasion it was a particularly painful plummet back to earth. The credit crisis of September 2008 quickly gave way to a global economic slump and, in addition, the projects to develop new Middle East LPG production capacity suffered major delays. On top of this the production of crude oil, and hence LPG, went into decline.
The payback for VLGC owners came in the form of plunging freight rates as an already overtonnaged fleet was augmented by a steady feed of newly commissioned ships. These returns, which barely covered operating expenses, were to remain at desultory levels for the next 18 months. In the continued absence of sufficient cargoes four VLGCs were put into cold layup between March and May 2010.
The upswing did not come until summer 2010 when a spate of West-East arbitrage cargoes and strengthening LPG exports from the Middle East Gulf increased the call on available tonnage. Even so, the turnaround was more in the form of a modest uptick than a full-blooded rebound. The Baltic Index marker for VLGCs - 44,000 metric tonnes (mt) of LPG on the Ras Tanura/Chiba route - averaged USD 35.2 per metric tonne (pmt) in 2010 compared to USD 22 pmt in 2009.
Going forward, the prospects for the VLGC fleet are now better than they have been for three years. Ship supply and demand have come into better balance and Middle East LPG exports are finally beginning to climb. Interest in Gulf LPG is being supported by the growing use of the gas as a petrochemical feedstock worldwide. A resurgent petrochemical industry is searching for cheaper alternatives to naphtha feedstock and Middle East LPG is poised to meet this need.
The pace of VLGC fleet expansion slowed in 2010 as the large orderbook continued to be whittled down. Nine VLGCs were delivered last year compared to 39 such vessels in the 2008-2009 period. Although the turnaround in the freight market last year has prompted renewed interest in newbuilding orders, gas carrier owners in general are now a chastened bunch and the level of new contracting has been modest. The two VLGCs that were ordered in August 2010 were the first newbuilding contracts for such vessels in two years and the reported price of US$75m per unit was almost $20m less than when the last orders for these vessels were placed in 2008.
A total of four VLGCs were ordered over the course of 2010, while contracts have been placed for an additional five vessels so far in 2011. The current VLGC orderbook stands at 16 vessels due to be completed between 2011 and 2013. The goal of achieving a better tonnage balance across the fleet has also been facilitated by the removal from service of older vessels. During the course of 2010 six VLGCs were sold for recycling.
In terms of newspaper headlines the current year, so far, has been one of surprises and many of the events continue to evolve. As the full effects of the Japanese earthquake, the Eurozone crisis and the so-called Arab Spring are still to be worked out, it is difficult to predict the future with any degree of accuracy.
Nevertheless, the fundamentals for VLGCs going forward are sounder than they have been for some time. The key driver of the growth in the seaborne movement of LPG is Middle East output. Gulf exports approached the 30 million tonnes per annum (mta) level in 2010 and are set to jump another 20% in 2011 as new production capacity comes on stream in Qatar and the UAE, principally Abu Dhabi. Middle East exports account for approaching 50% of the global trade in LPG.
Saudi Arabia produces 22 mta of LPG and although Saudi LPG output continues to inch upwards, more and more of the volume is being utilised domestically as a petrochemical feedstock and export shipments are dropping. The volume despatched overseas is currently running at the 9 mta level and the country remains the world's leading LPG exporter. That said, Qatar and Abu Dhabi will be competing for the distinction within the next 12 months.
The combined LPG exports of Abu Dhabi and Qatar approached the 14 mta mark in 2010 and both countries are poised for rapid growth in overseas shipments over the next few years. By 2015 Abu Dhabi is expected to be exporting LPG at a rate of 11.5 mta while Qatar's shipments should be at the 10 mta level.
Qatar's rapid climb up the LPG exporters’ league table comes courtesy of increased LNG output. Over the past two years the Gulf nation has commissioned six Super Trains, each capable of producing 7.8 mta of LNG, pushing the country's aggregate LNG production to the 77 mta mark and making Qatar's the world's leading LNG exporter by a wide margin.
Each day each Super Train produces 23,000 tonnes of lean LNG, 48,000 barrels of oilfield condensate, 7,000 barrels of plant condensate, 1,300 tonnes of propane, 800 tonnes of butane and 466 tonnes of molten sulphur. Qatari LPG exports reached the 5.5 mta level in 2010, up from 3.3 mta in 2009. Furthermore exports are set to reach the 8.2 mta mark this year and then climb slowly to a plateau level of 10 mta by 2015.
If all the planned increases are achieved, aggregate Middle East LPG exports will reach the 45 mta mark in 2015, a leap of 50% on the 2010 level.
Against this backdrop of rapid growth in Middle East LPG production, the big question remains. Will there be sufficient demand for LPG worldwide to keep the VLGC fleet suitably occupied? Two encouraging factors are the increasing use of LPG as a petrochemical feedstock and as an additive for lean LNG, to boost the fuel’s calorific value, at the point of consumption.
Ultimately, however, developing countries hold the key. The drive by less industrialised nations to switch their current sources of domestic fuel to LPG will continue to be the principal factor underpinning the growing demand for the clean-burning fuel worldwide.
Activity in the VLCC market was steady during the past week, but this failed to create a great deal of optimism among shipowners. Charterers were still able to easily secure transportion on the MEG/East route in the low ws50s. Nonetheless, even though it has been easy for VLCC charterers to prevail at current rate levels, the list of available tonnage is slowly getting shorter. With the balance between supply of VLCC tonnage and the demand for it still on an even keel, there is always the chance that the continuing erosion of tonnage availability could make things difficult for those who still have June stems,...if they wait too long to fix. Tonnage could, presumably be in much shorter supply if the steady rate of fixing continues. The Suezmax market in WAF was slow with rates holding in the low ws70s for voyages to the USG, and with plenty of tonnage availability, it seems unlikely that owners can expect a lift in the near future. The same was true for Suezmaxes in the Med/Bsea area where rates were also in the low ws70s. With only a single outstanding cargo reported from the Bsea, rates could be under further downward pressure. There was also little cause for Aframax owners to celebrate either as rates declined from all loading areas in the face of little activity. Aframax tonnage continues to be plentiful and until more activity makes an appearance to take up the slack, those charterers who do enter the market will find themselves sitting securely in the driving seat.
Following the massacre in transatlantic freight rates seen last week, the market bottom seems behind us for now. MR rates have stabilized at ws145 for UKC/USAC basis 37kt. Activity on the LR1s trading Baltic/USAC is still sluggish, pushing rates down to ws125 basis 60kt. Too many ships on the continent have put smaller ships under pressure as well, with Handies trading across NWEurope at ws165 basis 30kt, and Flexis at ws200 basis 22kt. Caribs and USG activity is slow as well, with upcoast voyages fixing at ws145 basis 38kt, backhaul voyages USG/UKC-Med at ws90 level basis 38kt. Despite the flattening out in transatlantic rates, we´re not going to hold our breath for a big bounce just yet. After a soft period in the clean tanker market East of Suez, we expect to see the market to stabilize at present levels. For LR1s trading MEG/JPN fixtures are being concluded at WS 135 basis 55kt, and on LR2s fixtures are being concluded at WS 115 basis 75kt on the same route. Jet fuel liftings MEG/UKC basis 65kt are fixing at USD1.95 million. MRs trading Spore/JPN are seeing rates around ws150 basis 30kt, whilst MRs trading MEG/JPN are seeing rates around ws152 basis 35kt.
The Handy/Supra market has in general been flat and un-exciting this week. The Black Sea market is almost non existing while the US Gulf market is more active with grain and petcoke cargoes. Tarv´s are fecthing ard Usd 15, 500 while the South Atlantic is holding stable with rates hovering ard mid 20
´s for trips back to the Feast. The Pacific market remains quiet. For Indo- India, Supras in North China are getting close to 11k. Nickel-ore rounds are getting firm rates in mid-high teens from Indonesia. WCI-China rates slided to 13k and from ECI around 12k. Red Sea, ferts on handymax/Supras are fixed at very mid 20´s pmt on voyage basis to WC India. Large Supras for RBCT/India round are now asking 14k. Short period deals done at 14-15k for large Supras.
After last week´s rush to cover prompt cargoes on the remaining spot ships with increasing rates, the market took a breather this week. The activity has been slower, and the curves have been pointing downwards in both hemispheres. Ascension day in several European countries on Thursday will probably not help on the activity, but mid week we see signs of more cargoes entering the market for mid/second half June. This will most likely affect owners´ rates, and push the market a bit up again in the Atlantic. Today the Tarv´s getting fixed in the region of 15,500 while fronthauls are being fixed in the low 20´s. In the Pacific the rounds are being fixed ard 13k while the backhauls are fetching around 6k. The period market has been somewhat more active this week with short periods being fixed with Feast delivery at ard USD 15,500.
Last week´s enthusiasm has continued into this week, and the results are apparent in the rates owners are achieving. West Australia up from usd 7.35 pmt to usd 7.75 pmt. And the strength in the Atlantic continued, with fixtures done this week at USD 13k p/d for round voyages, up from USD
12k. The transatlantic market has helped the Brazil /China trade, which has struggled to move upwards due to too many committed ballasters, and rates are now at usd 20.50 pmt, up from usd 19.75 pmt on Friday, as vessels open in the Atlantic are preferring to fix better numbers on the Atlantic RV route. On the period front there has been a few fixtures concluded for shorter period at healthier numbers such as USD 11250 for 4-6 months on a 178k dwt modern unit.
Has the VLGC market bottomed out in this cycle now? A few vessels were fixed and sub-fixed at and marginally over the USD 40 mark (Ras Tanura/ Chiba basis), a level that equals no more than the OPEX rate of a modern VLGC, about USD 10,000 per day. This is the lowest net return since first quarter 2010, a level way under what was expected only a couple of weeks ago for 2nd quarter 2011. May ended with a bit of a sigh and lukewarm spirits, but nonetheless there was some activity and even vessels showing open in the middle of June were looked at. The independent owners seem to have said to themselves "enough is enough, now we have done our part" and will wait for the charterers to make the next moves in reviving the market over the next weeks. The June posted prices were announced yesterday, as expected considerably lower than the May posted prices, but probably not sufficiently low to encourage an awful lot of trading and chartering. Most likely the freight market will carry on slowsteaming in the nearest future, but we will not be surprised if rates turn modestly upwards.
The week following Nor-Shipping we note that a number of contracts have been concluded during or shortly after Owners and Shipyards met in Oslo. We see good activity in the newbuilding market with larger units now slipping into 2014 deliveries at the major yards. Still a pressure towards increasing prices due to a weak US dollar as well as increasing steel prices.