Freight Market

Tanker

VLCC | MEG to China improves

VLCC rates improved this week across the main routes. In the Atlantic, TD15 (West Africa/China) rose by nearly 17 points to about WS73, while TD22 (US Gulf/China) recovered to $9.6m, implying roundtrip earnings just under $60,000/day.

In the Pacific, TD3C (MEG/China) gained 24 points to WS74, with round-trip earnings quoted at $55,500/day, marking a clear improvement into the week’s close.

Suezmax | West Africa firms

Suezmax sentiment turned firmer, led by West Africa and the AG. In the Atlantic, TD20 (Nigeria/UK Continent) was assessed at WS128, with round-trip earnings at $53,700/day, while TD27 (Guyana/UK Continent) was near WS132, translating to just over $57,600/day. In the Mediterranean, TD6 (CPC/ Augusta) was around WS155, with earnings a fraction over $81,000/day. East of Suez, TD23 (MEG/ Med via Suez) was about WS97.

Aframax | US Gulf stays firm with rates holding higher

Aframax rates stayed stronger in the Americas, while Europe was steady and Pacific export routes improved. In the Atlantic, TD26 (EC Mexico/US Gulf) gained 14 points to WS247, with round-trip earnings a little over $69,600/day, and TD9 (Covenas/US Gulf) added 14 points to WS235, implying almost $61,000/day, while TD25 (US Gulf/UK Continent) rose 3 points to WS221, giving over $56,200/day. In Europe, TD7 (Cross-UK Continent) slipped 3.5 points to WS147, while TD19 (Cross-Med) eased to 157. In the Pacific, TD28 (Vancouver/China) firmed by $100k to $2.66m and TD29 (Vancouver/PALP) gained 13 points to WS210.

LR | MEG routes strengthen on firmer levels

LR rates climbed in the MEG across both LR2 and LR1. LR2 TC1 (MEG/Japan) rose 12 points to WS180, with round-trip earnings at $43,200/day, while TC20 (MEG/UK Continent) increased by $275k to $4.3m and TC15 (Med/East) stayed unchanged at $4.25m. LR1 TC5 (MEG/Japan) moved up from WS177 to WS190 and TC8 (MEG/UK Continent) ended $192k higher at $3.3m. West of Suez, TC16 (ARA/West Africa) stayed in the high WS140s.

MR | US Gulf strengthens with rates moving higher

Clean MR rates remained split by basin, with a sharp rise in the US Gulf and weaker levels in the MEG. In the Atlantic, TC14 (US Gulf/UK Continent) climbed to WS201, with round-trip earnings at $24,200/ day, while TC21 (US Gulf/Caribbean) rose to $850,000 and the MR Atlantic Triangulation Basket TCE increased from $21,000/day to $31,000/day. In Europe, TC2 (ARA/US Atlantic Coast) held around WS110–113, with round-trip earnings hovering around $5,500/day. In the Pacific, TC17 (MEG/East Africa) fell 12 points to WS240, with round-trip earnings quoted at $24,800/day.

Sale & Purchase

Secondhand sales Dry

During the entire period of the last week of December and the first two weeks of January, dry bulk S&P transactions in all major size classes remained at a high level, and volume of transactions was an indicator of the fact that there were still buyers present even though it was the season with less activity.

In the Capesize section, price variation still was mainly due to the ship's age and condition. The MINERAL HONSHU (181,000 dwt, 2012, Koyo) was sold for USD 37.42 million, which made evident the choice being made for decade-old vessels to a greater extent even though the freight rates were supportive. Together with the Cape market, the Newcastlemax area was the venue for the NORD PALLADIUM (210,000 dwt, 2021, Shanghai Waigaoqiao), which was the most expensive one with USD 76.25 million, thus confirming the trend of attaching premium to large modern high specifications ore carriers with very long remaining trading life.

The Panamax segment was especially buoyant, indicating strong investors' trust in this size group. Pricing was one of the major factors that proved this, the price of the BW MATSUYAMA (82,000 dwt, 2019 Tsuneishi Cebu) being USD 31 million, while the price of the JAG AARATI (80,000 dwt, 2011 STX) was only USD 15 million which made the difference in price between modern and aging tonnage very clear. On the other hand, CENTURY SHANGHAI (82,000 dwt, 2018, Chengxi) was sold for the starting price of USD 25.02 million in an online bidding procedure which showed that demand was strong at the level of the market price.

The Supramax segment still full attention on the new eco-friendly ships. The STARRY NIGHT (61,000 dwt, 2022, Nantong COSCO KHI) was sold for USD 32.5 million which was yet another proof of the great demand for the vessels that are nearly brand new in terms of shipyards, modern fuel efficiency, and low operating profiles.

To sum up, the dry bulk S&P market is in a very good position as it enters the new year. The strong freights and regular market conditions provide a solid foundation for continued asset price stability and sustained buyer interest as the market moves further into the new year.

Sale & Purchase

Secondhand sales Tanker

The tanker S&P market for the period that encompassed the last week of December and the first two weeks of January was completely overshadowed by a remarkable surge in VLCC swaps which in majority were due to Sinokor’s rapid fleet enlargement. The South Korean operators have gathered almost 30 VLCCs in a very short period of time which has, in fact, taken over the entire market liquidity and also altered the pricing strategies of the segment positively.

The spotlight was on a series of buzz-worthy transactions. OCEANIS (321,000 dwt, 2011, Samsung) was traded at USD 68.5 million, while DELTA ANGELICA and DELTA GLORY (both 320,000 dwt, 2012, Hyundai, and scrubber-fitted) realized USD 80 million each. ATLANTAS (319,000 dwt, 2010, Daewoo, and scrubber-fitted) was a part of an en-bloc deal worth USD 140 million, and NISSOS PSARA (302,000 dwt, 2011, IHI, scrubberfitted with upcoming SS/DD) was set at USD 68 million. The most expensive segment had the FRONT 2016-built VLCC series (Hyundai and Hyundai Samho) traded in an en-bloc deal worth USD 831.5 million which showcased that there was still a lot of demand for the best quality modern and large crude tonnage.

Sinokor's purchases, it is worth mentioning, have mostly been in the 2010-2016 built time frame, indicating a conscious choice of the vessels that still have a good trading life and are technically and regulatory compliant. The 2010-2016 built window provides the best in terms of cost efficiency and employability amongst ships, especially since compliance with emissions, fuel quality and downloader vetting standards are the three things that ultimately continue to drive investment decisions. At the beginning of this year, there was a good addition of new VLCC sales candidates but the majority of these were already at or over the 20-years age limit, hence the supply of modern and mid-age ships is still limited. This mismatch has further intensified the price pressure which was already there due to Sinokor’s buying and is now helping to keep the values high.

Transactions, moreover, were made in the context of firm and very assertive price levels, which meant a clear and radical upgrading in VLCC asset benchmarks. The volume and the urgency of the buying campaign have significantly restricted the availability of ships in the preferred age groups, thus putting sellers in the commanding position and setting a much higher entry level for the new buyers. However, the demand being the highest is mainly for modern and mid-age VLCCs but over time this demand is going to cover all age categories, thus slowly raising even the oldest ships as the market is being affected by the factors of replacement economics and benchmark recalibration. Activity outside the VLCC segment was more selective but still regarded as positive. There was a change of ownership for a Suezmax and an Aframax in the course of the transactions, while the MRs were still being targeted by steady buyers, which was supported by their versatility, strong earning potential and wide sort of charterers' popularity.

All in all, the buyers' strength concentrated in a few places, the en-bloc deals' magnitude and the readiness to sell at high prices points to a market that has made a decisive turn towards the sellers, in which VLCC values are increasingly affected by long-term earnings expectations and fleet renewal pressures rather than short-term market cycles.