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2018-03-21 17:37:00

Demand for LNG as a marine fuel has risen significantly, especially in Nordics marine market, according to a Norwegian LNG supplier Skangas.

The driving force behind the rise is the addition of new vessels to the LNG-powered fleet on the back of ever increasing conversion of ships to dual-fuelled engines and a switch to LNG as marine fuel in anticipation of more stringent environmental regulations.

The market has been waiting for the LNG bunkering vessels, according to Skangas.

The switch to LNG has been prominent in European waters, Gunnar Helmen, Sales Manager – Marine for Skangas said, where, until recently, most of the traffic consisted of ferries and RoPax cruise ferries routinely traveling set routes.

“Today, the supply pattern is more diverse due to the use of a greater variety of vessels, that require different types of bunkering solutions.  And we are responding directly by offering a number of solutions for this market.”

Skangas said that it has completed 1,000 LNG bunkering operations in 2017, representing more than 60 pct increase over previous years. This was enabled, among other things, by the introduction of the company’s customized bunker-feeder vessel Coralius into operation in 2017, which delivers LNG through ship-to-ship bunkering at sea.

As responsible marine transport and shipping companies seek cleaner fuel alternatives to power their fleets, Skangas expects demand for LNG by the marine market to increase significantly during the coming years.

“Already, the number of bunkering operations we’ve executed for the marine market is higher than in Q1 2017,” said Helmen.

“Clearly, 2018 is set to be another exciting year for Skangas, as we continue to provide readily accessible LNG to industries that operate at sea and onshore throughout the Nordics.”

2018-03-12 15:47:28

Total capacity on the transpacific routes is expected to increase by at least 8% by July this year, according to Alphaliner.

So far, two new services were unveiled for the routes, which are expected to add to various capacity upgrades planned on existing services.

Overall capacity to both the US West Coast and US East Coast is expected to increase by 8 to 9%, with additional capacity to be progressively phased in from April.

Alphaliner informed that OCEAN Alliance carriers are to contribute the bulk of the additional capacity, with overall growth of more than 10%, while SM Line would almost double its capacity with the launch of a new service to the Pacific Northwest in May 2018.

APL has also announced a new Eagle Express X (EXX) service, to be launched in July 2018, offering a fast eleven-day transit time from Shanghai to Los Angeles. The new loop is set to challenge the ten-day express service that Matson offers on its China-Long Beach Express (CLX).

“The planned capacity increases will have an impact on the ongoing rate negotiations for the new annual Transpacific service contracts from May 1 and spot freight rates are expected to come under pressure as vessel utilisation falls,” Alphaliner said.

After the brief recovery of January and February, SCFI spot rates are to register falls in the coming weeks as demands slows after the Lunar New Year holidays in the Far East.

2018-03-12 15:42:53

Danish shipping company TORM managed to remain profitable in the year ended December 31, 2017, despite a challenging product tanker market.

The company’s profit before tax amounted to USD 3 million in 2017, compared to USD -142 million seen in the previous year, while its revenue dropped to USD 657 million from USD 680 million reported in 2016.

For the full year 2017, TORM achieved Time Charter Equivalent (TCE) rates of USD 14,621 per day, which were down from USD 16,050 per day reported a year earlier.

Despite a healthy consumer-driven demand for refined oil products, the record high clean petroleum product inventory levels globally, which were built up during 2015 and 2016, had a negative impact on the product tanker market in 2017.

Inventory drawdown was an overriding theme in 2017, which naturally had a negative impact on product tanker demand. In fact, global stocks of clean petroleum products decreased by a volume equivalent to a loss of potential trade of 4%.

“In 2017, TORM continued to execute on its strategic objectives. I am pleased that we were able to grow the fleet through attractively priced vessel acquisitions, complete the US listing in December and finally, in January this year, we raised USD 100 million in new equity for further growth.” Christopher H. Boehringer, Chairman of the Board, said.

“Looking ahead, I have confidence in the strength and performance of the TORM platform. With an encouraging market outlook for product tankers, I look forward to reporting on our progress throughout 2018,” Boehringer added.

During 2017, TORM acquired six MR resale vessels, two of which were delivered in the third quarter of 2017, and executed newbuilding options for two LR1 vessels for a total consideration of USD 259 million.

In addition to the vessel acquisitions, TORM has over the course of 2017 sold five older vessels, including one MR and four Handysize vessels. TORM has also made three sale and leaseback transactions that are treated as financial leases although they have no purchase obligation attached.

In December 2017, TORM achieved a milestone by listing its A-shares on NASDAQ in New York. Following the balance sheet date, in January 2018, TORM completed an equity raise of USD 100 million.

2018-03-07 15:51:31

While the dogma of “America First” is a time-bomb in the foundations of free trade and its growth prosects, especially as it’s starting to materialize from fiction to reality, crude tanker owners are looking for the silver lining of the US economy these days. This can be found in the form of a booming export trade of crude oil, which has the potential to offer a much needed boost in the tanker freight market. In its latest weekly report, shipbroker Cotzias Intermodal Shipping, said that the “US shale production continues to grow rapidly, hitting new records and with projections being revised upwardly at every turn. According to the International Energy Agency, the US will overtake Russia as the world’s #1 crude oil producer by next year, having surpassed 10m bpd in late 2017 and slated to surpass 11m bpd by the end of 2018”.

According to the shipbroker, “over the past two years US shale oil companies have managed to become more efficient, optimizing production processes and utilizing new technologies and practices at lower costs. This is attributed in part to technological breakthroughs on the drilling side; Break-even points for US production have been driven substantially downward. It remains to be seen if this increase will be sustainable but at this point most pundits do not see production peaking before 2020. The booming production has of course unnerved other producers and oil markets globally and comes at a time when other producers have voluntarily capped their own production in order to prop up prices. During 2017, we witnessed the spike in prices due to OPEC production cuts with prices steadily correcting upwards since November 2016. Oil is currently trading in the low $60s, after peaking at a 3-year high of ~$66pb”.

Linos Kogevinas, Commercial Executive with Cotzias Intermodal Shipping, said that “OPEC and its allied producers are seeing their market shares eroded by the increasing US production. At the same time, US oil imports are also dropping, further shrinking profits from OPEC established markets. With this in mind, it will be very interesting to see how the commodity price will fare under these new conditions. US shale production will be extremely important to watch over the next 5 years. It is almost certain that production will continue to grow in the next years. However, a number of factors will determine if this growth will be sustainable long term and how the market will balance itself under a future -potentially different- status quo”.

According to Kogevinas, “on the tanker side a growing US production is good news as exports from the country could be offering more and more support to rates in the future as apart from Europe and Latin America, the long haul trips to the Far East and particularly to China is gaining increasing momentum. Thomson Reuters data reveals that US shipments specifically to China that were non-existent prior to 2016 have now reached a new record of around 2.01 million metric tonnes or 474,450 barrels/day during last month. Sinopec, the biggest oil refiner in China, expects to import 10 million metric tonnes of crude oil from the US during 2018. As the production cap from OPEC and Russia continues, the fairly new and quickly increasing flow of the commodity from the US to S. Korea, Japan and China is definitely something to watch out for. Additionally as a growing US production will almost certainly keep undermining OPECs efforts to boost oil prices, this means that the price of the commodity will keep moving – at least for the short to medium term- within a specific range that is still considered attractive for consuming countries maybe not compared to early 2016 levels but certainly when compared to mid-2014 levels of around $ 100/barrel”, he concluded.

2018-03-07 15:49:07

The “mantra” of 2018 has been calling for prudence from the part of ship owners, if a freight market rebound is to materialize in the tanker market, not to mention the danger looming for the sustainability of the dry bulk segment as well. Still, newbuilding contracting activity has been quite firm. Over the course of the past week, Allied Shipbroking commented that “the newbuilding market felt an uptick in activity this past week, despite the continuing sluggish mode that has been noted in the market lately. This coincided with the rebound in volume noted from the tanker sector, which countered the overall feel this market has been giving off lately. Seeing once again movement, has helped build up positive sentiment, however, this boost is embraced with hesitation by many market participants. Given the volatility of the market, it is not surprising that many are questioning these latest orders, with fears mounting as to the added pressure these new vessels may well bring come their delivery date. On the other hand, new ordering in the dry bulk market continues to remain slow, indicating that flow from that side is losing stability and becoming subject to periodical pressure or to potential opportunities that may arise. Given their more robust fundamentals, it has been surprising to see that so few have flocked to take up this ordering option window, especially when noting the significant upward pressure being seen on prices right now”, said Allied.

In a separate shipbuilding report this week, Clarkson Platou Hellas said that “in Tankers, Daewoo Shipbuilding & Marine Engineering (DSME) have announced signing a contract for three firm 300,000 DWT VLCCs with an unknown owner. The vessels are set for delivery within 1H 2020 from Okpo. DSME have announced winning a further order for two firm 300,000 DWT VLCCs from an unknown European owner. These two units will also deliver within 1H 2020. DSME have also announced a contract for two firm 174,000 CBM LNG Carriers for delivery in 3Q 2020 – similarly the buyer’s identity remains undisclosed. In the small sizes, Jinling Shipyard have received an order for one firm 6,500 CBM LPG/Ehylene Carrier from domestic owner Nanjing Yangyang Chemical Transport for delivery in 1Q 2020”, the shipbroker said.

Meanwhile, in the S&P market this past week, shipowners’ appetite for additional dry bulk tonnage was unabated. In its report, Allied said that “on the dry bulk side, the temporary pause came as quick as it appeared, with a exacerbated rush for deal conclusion being seen after the end of the Chinese New Year. It looks as though the situation in the freight market added significant confidence amongst buyers, while it now seems as though we may well see some increased competition emerging amongst buyers. With an extra boost from the freight market one could see how this could easily heat up the market relatively quickly, while we are likely to see most of this force focused on the more modern tonnage this time around. On the tanker side, things went back down to “quiet”, with a minimal level of vessels changing hand this week. It seems as though the recent trough in the freight market has caused many to take yet again a “wait and see” strategy, while there are still many that feel that sentiment is clouded in considerable uncertainty for now, giving mixed views amongst both buyers and sellers”, Allied Shipbroking said.

In a note this week, VesselsValue said that bulkers’ values have remained mostly stable, but with a slight firming in older panamax tonnage. “Panamax Sea Ace (81,800 DWT, Sept 2012, Longxue) sold for USD 18.5 mill, VV value USD 17.32 mill. Ultramax BW Durum (61,500 DWT, Sept 2016, Dalian COSCO) sold to Navigare for USD 25 mill, including a charter for 1 year at USD 12,000 pd. VV value 23.61 mill. Supramax Darya Vishnu (56,100 DWT, Jul 2006, Mitsui Tamano) sold to Polforce Shipping for USD 12.8 mill. VV value 12.23 mill. Supramax Polestar (53,500 DWT, Feb 2006, Imabari) sold at auction for USD 9.3 mill to Pingtan Minghui. VV value 11.36 million” said VV.

2018-03-01 17:25:32

Hong Kong-based Seaspan Corporation has returned to profit in 2017 with reported net earnings of USD 58.6 million for the fourth quarter and USD 175.2 million for the full year ended December 31, 2017.

This is a major rebound when compared to the corresponding USD 1.4 million net profit from Q4 in 2016 and a net loss of USD 139 million booked for the entire year.

Total revenues reached USD 214.4 million for the fourth quarter of 2017 and USD 831.3 million for the full year.

Full-year revenue decreased by 5.3 pct year-on-year, primarily due to lower average charter rates for vessels that were on short-term charters and off-charter days that related primarily to three 10,000 TEU vessels that were previously on long-term charters and commenced short-term charters with Hapag-Lloyd AG during the first half of 2017.

These decreases were partially offset by the delivery of newbuilding vessels in 2016 and 2017.

“2017 was an important and pivotal year for Seaspan. We continued to achieve strong operating results, maintain a sizable contracted revenue backlog, and grow our operating fleet on long-term time charters by taking delivery of five newbuildings with charters of 10 to 17 years,” David Sokol, Chairman of Seaspan, said.

“With a focus on driving shareholder value, we also took important steps to strengthen our corporate governance, deleverage our balance sheet, and increase our unencumbered asset base. We are pleased to have commenced 2018 with a USD 250 million investment by Prem Watsa-led Fairfax and the acquisition of two second-hand feeder vessels chartered to Maersk.”

Currently, there are 23 unencumbered vessels in Seaspan’s operating fleet, the company said.

“Against a backdrop of improving fundamentals and a changing competitive environment, we see a rich set of opportunities before us. I am confident we are well positioned to capitalize on these opportunities and to create substantial long-term shareholder value,” Bing Chen, President and Chief Executive Officer of Seaspan, commented.

Seaspan Corporation signed definitive agreements with Fairfax Financial Holdings Limited for USD 250 million of investment in January this year.

During the same month, the company took delivery of the fifth of five 11,000 TEU vessels on a long-term bareboat charter with MSC Mediterranean Shipping Company, MSC Yashi B.

2018-03-01 17:19:47

2018 is not likely to be the turning point for the crude oil tanker market taking into account the anticipated fleet growth set to continue this year, distorting further the balance between supply and demand.

A total of 58 very large crude carriers (VLCCs) are scheduled to be delivered this year, although some of these are expected to be pushed to 2019, and further contracting has decreased when compared to 2017.

This compares to 50 VLCCs delivered in 2017 and 47 in 2016.

However, increased scrapping of older crude carriers has sparked some optimism with 13 VLCCs removed from the global fleet in 2017 and up to seven reported to be scrapped so far this year.

“It will take some time until the crude oil tanker market has sufficiently absorbed new supply of vessels, despite the existence of factors that are evident in strong markets. The inflection point in the market has clearly not yet arrived, but when it is here and the right opportunities present themselves, we will be prepared to act,” Frontline said in its financial report for the fourth quarter of 2017.

The Norwegian tanker owner has two more VLCCs pending delivery, with two VLCCs and one LR2/Aframax tanker delivered in January 2018.

On the demand side, the world economy and crude oil demand remain strong. The oil supply growth has primarily come from the Atlantic Basin, whilst the demand growth is in Asia, which is positive for tonne-mile development, Frontline said.

Nevertheless, the drawdown of crude inventories has pushed down the freight rates, negatively impacting the market.

“While inventories remain elevated, days of forward demand cover has decreased sharply due to rising consumption, and we expect inventory draws to halt in the second quarter of 2018,” Frontline added.

Speaking of the outlook, Frontline believes there will be opportunities going forward and the tanker owner says that it has the financial and commercial platform to grow its fleet when a beneficial opportunity arises.

“Until then Frontline is sharply focused on maintaining our cost-efficient operations and low breakeven levels,” the shipowner concluded.

2018-03-01 16:54:58

The current orderbook for 1.42 million TEU of boxship giants will impact the capacity market shares between the three Alliances on the Asia to North Europe trade lane, SeaIntel informed.

Namely, the orderbook of 20,000+ TEU vessels is expected to push the Ocean Alliance to gradually match the Asia-NEUR capacity market share of 2M by 2019, and surpass them in 2020, while THE Alliance is expected to gradually lose market share.

THE Alliance will see their capacity market share decline from 25% to 21%, while Ocean Alliance will gradually match the 38% capacity market share of 2M by 2019, and then gradual surpass them in 2020.

If HMM confirms their rumoured order, they may reach a capacity market share of 6-7% in 2021, while the alliances will see their shares drop correspondingly, according to SeaIntel.

Even if 2018-2021 demand is expected to outpace that of 2012-2017, it will likely be necessary to close 1-2 services to balance supply and demand.

“Estimating future demand growth is fraught with difficulties, but industry consensus seems to suggest that demand growth will be better in the coming years, than what we’ve seen in 2012-2017. If this is the case, then closing three services would seem like overkill, but balancing supply and demand would probably necessitate the closure of 1-2 services, depending upon the underlying demand growth,” Alan Murphy, SeaIntel CEO, said.

2018-02-27 15:16:47

Qatar-based LNG shipping company Nakilat recorded a net income of QAR 847.2 million (USD 232.6 million) in 2017, down from QAR 955.4 million (USD 262.3 million) posted a year earlier.

Despite the challenges facing the energy and maritime industry, the company said it managed to achieve positive results across its operations.

As explained, the results exceeded planned expectations in 2017 through enhanced operational efficiency and a reduction in general, administrative expenses and finance costs.

The net profit achieved in the fourth quarter of 2017 was higher than that achieved in the third quarter and fourth quarter of 2016, by 21% and 16% respectively.

Complemented by strategic long-term agreements with charterers, Nakilat has managed to maintain steady cash flow. Given the volatile market conditions, the company embarked on cost optimization initiatives, capitalizing on profitable business growth, and achieving cost savings.

Furthermore, Nakilat said it “continues to explore and capitalize on different business opportunities and mitigating business risks to strengthen the company’s international position.”

Nakilat’s fleet currently comprises 67 wholly- and jointly-owned LNG carriers and four LPG vessels.

2018-02-27 15:14:43

Over the course of 2017, VLCC tanker values exhibited price depreciation for the second consecutive year, as the market fundamentals put pressure on earnings. Newbuilding contracts averaged US $82.8 million (basis Korea/Japan), a decline of 8.5% from 2016 average values; however, the second half of the year is pointing to a firmer market as yard capacity remains constrained and owners, backed with charter coverage, look to capitalize on the lowest annual prices since 2003 (Figure).

In 2017, 5-YR old tankers averaged US $60.5 million experiencing pricing pressure through the year, with a low of US $56.5 million recorded in February. On a year-over-year basis, this represented a 12.0% decline from 2016 levels. The 10-YR old tanker depreciated at a similar pace, falling 11.6% in the year, averaging US $40.9 million

In January 2017, we called for Newbuilding values to average US $82.0 million, with our projections falling only 1.0% below actual levels. Our 5-YR old vessel forecast of US $59.0 million (annual average value) was 2.5% below the actual recorded average value of US $60.5 million. The 10-YR old average value of US $40.9 million in 2017 was 5.8% above our original forecast.

Historically, our data shows that the price of a 5-YR old VLCC trades at around 79% of the Newbuilding contract value. In 2017, this ratio fell to 73% as weak earnings pressured the secondhand market more vigorously. In 2018, we expect 5-YR old values to account for 72% of a Newbuilding value, while the 10-YR old price should increase to 50%, below the long-term average of 57%. With scrap prices projected to remain at around US $16 million, our 10-YR price forecast of US $43.5 million, indicates that the scrap ratio will remain about 10% higher than the long-term average.

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