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Healthy levels making tanker owners happy

The wet market continues to stay at healthy levels making tanker owners happy. Despite some analysts’ prediction that tanker rates’ upward trend wont last long, market fundamentals have proved them wrong. Apart from the sanctions on Russian oil and products that have created new seaborne trade flows and the low orderbook that doesn’t facilitate to the development of the available tanker fleet, China is also adding to the key factors that support the wet market. China’s oil consumption has dropped by 0.6% in 2022 to 14.44 million b/d mainly because nationwide lockdowns of the zero Covid policy decimated oil demand. But as the country lifted the zero covid policy and stopped the lockdowns since early December of 2022, China’s overall oil demand started to recover. Analysts and traders expect that oil demand will reach 15.18 million b/d in 2023, 5.1% higher than 2022. More specifically Gasoline and jet fuel will be the leading contributors to the overall oil demand growth in China in 2023, rising by 11.1% and 57.3%, respectively. Imports won’t be the only thing that will be a support to the wet market. China National Petroleum Corporation expects that the increased exports of oil products that started within 2022 will continue unchanged in 2023. Oil products output is expected to increase by 8.4% year on year to 9.43 million b/d, in 2023, leaving around 762,328 b/d, to be exported. Since the start of 2023, Aframax 1-year TCE (6 routes) is at USD 74,797/day, 20% higher, Suezmax 1-year TCE (2 routes) is at USD 75,682/day, just 1% higher and VLCC 1-year TCE (2 routes) is at USD 55,660/day, up by 120%. Based on the above TCE rates, the last 12 months are the best 12 month period for Aframaxes and Supramaxes since 2013, while for VLCC is the second best. MR Atlantic and MR Pacific Basket have also the best 12 months period of the last 10 years with MR Atlantic basket about 38% higher YTD (USD 40,643/day) and MR Pacific having a 35% correction YTD (USD 37,975/day) but still more than double figure y-o-y. The dry market is still trying to find its footing and sustain the upward trend that started within February mostly based on the belief that China’s economy will pull off a glorious post-Covid 19 recovery. China at last has lifted the Australian coal ban and as a steel producer has returned to production levels not seen since 2013. But China’s effect to the dry market hasn’t been as effective as it is to the wet market and alongside the global economy fundamentals that haven’t been very inspiring (rising interest rates, inflation, geopolitical conflicts) dry bulk market must be prepared for a season of great volatility.

On the oil side now, Saudi Arabia, Russia and key OPEC+ allies announced their plan to make more than 1.6 million b/d of voluntary supply cuts in total, with the bulk of these reductions starting in May and lasting until the end of the year. The UAE, Kuwait, Iraq, Algeria, Kazakhstan and Oman joined Saudi Arabia's announcement of new cuts, with total reductions for the seven producers excluding Russia amounting to around 1,149,000 b/d of output over the same period. With the addition of Gabon, which also on April 2 pledged 8,000 b/d of cuts, and Russia, the total reductions amount to approximately 1,657,000 b/d. These news surely will create confusion and upheaval to countries that have stopped buying Russian oil and products but India and China may have less to worry about, since Russian flows keep increasing.

Following previous week’s analysis in dry bulk sales for Q1 2023, we now investigate on tanker sales for the same period. As of 31st March, 220 tankers have been sold, almost 60% up compared to the same period of 2022. The main interest was focused on the MR2 sector with 66 sales which constitutes 30% of total tanker sales, followed by Panamax/LR1 and Small tankers segments with 36 and 29 sales respectively. On the MR1 24 vessels were sold during the Q1 2023, while on the Aframax/ LR2 and the VLCC sectors 26 vessels per segment changed hands. Finally, on the Suezmax sector we noted a limited interest as only 12 vessels changed hands. In contrast with dry S&P activity which highlighted an upward trend month per month, tanker’s S&P activity is like a cardiogram referring to sold vessels month over month. The year had a dynamic start, with 74 vessels being sold during January 2023, whilst in February tanker sales decreased to 58 vessels, after peaking within March to 88 vessels. The buying appetite was mainly focused on vintage tankers with almost half of sales belonging to the age group 16-21+ year old. According to our data, Greeks played an important role on selling side tanker activity, with many Greek owners getting rid of their vintage tankers. Greeks have sold 56 vessels (25.5% out of total tanker sales), with the majority of those vessels older than 16year (42 vessels). China, Germany and Norway were also high on the tanker’s sales charts, as each of them have sold 22 vessels.

Sale and Purchase:

On dry S&P activity, the Capesize sector, clients of Norden acquired the “Star Borealis”- 180K/2011 HHIC-Phil and the “Star Polaris” - 180K/2011 HHIC-Phil for USD 32.5 mills each. Greek buyers acquired the Kamsarmax “Bulk Japan” - 83K/2006 Tsuneishi for USD 14.5 mills. On the Supramax sector, the “Glovis Maine” - 57K/2013 Tianjin Xingang was sold for high USD 15 mills, whilst the 2-year older “Super Odegaard” - 56K/2011 Mitsui was sold for excess USD 18.5 mills to Greek buyers. Finally, on the Handysize sector, clients of Deval acquired the OHBS “Maestro Pearl”- 37K/2015 Saiki for USD 22.5 mills, whilst the “Taizhou Pioneer”- 32K/2011 Taizhou Maple was sold for low/mid USD 11 mills to Greek buyers.

On wet S&P activity, the Aframax, “Nectar Sea” - 105K/2008 Sumitomo changed hands for USD 37 mills. The LR1 “Nordic Geneva”- 74K/2009 New Times found new owners for USD 23.5mills. On the MR2 sector, Dubai based buyers acquired 2x vessels, the “Wisby Pacific” - 50K/2017 GSI and the “Wisby Atlantic” - 50K/2017 GSI for USD 43.5 mills each. Furthermore, the “Elandra Blu”- 51K/2008 SPP and the “Elandra Corallo”- 51K/2008 SPP were sold for 24 mills each to clients of Viken. The MR1 “Voge Trust”- 38K/2009 GSI and the “Voge Dignity” - 38K/2009 GSI were sold for USD 38.5 mills enbloc, while clients of Sea Transport acquired the “Norient Saturn”- 40K/2007 Santierul Naval for USD 19.65 mills. Last but not least, the “Jey Hope” - 9K/2008 build in Kwangsung was sold for USD 8.3 mills to UAE based buyers.

Xclusiv Shipbrokers Inc.