Tankers up on Contango return: container rates down on slow trade

 Were daily tanker earnings to drop to $40,000, traders would be able to use the ships to store millions of barrels of crude at sea because the oil-price structure means they can sell cargoes for later in the year at a profit. Rates of $40,000 would be higher than the annual averages in 2009-2014.

January saw the worst start to a year for container ship earnings for three years. Vessels returned just $5,957 a day on average. The average between 2010 and 2014 was $7,712.Many of the world’s busiest container shipping routes are suffering from the slowdown in emerging markets and weak growth in Europe. China’s economy grew at 6.9 percent last year, the slowest since 1990. Europe’s predicted 1.5 percent expansion in 2015 would be among the weakest globally

[January 25  As OPEC saw its prices sink below $30 a barrel:. the cost to ship the commodity rose.   ].


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[December 7 2011 Low rates yield slow steaming]


Shipping companies are cooperating to ease overcapacity and revive rates. Vessels reduce their speeds, known in the industry as slow steaming, to better manage overcapacity within the global fleet of about 600 VLCCs, Sejling chief commercial officer at Maersk Tankers. said. Lower speeds increase the amount of time needed to complete a voyage, effectively curbing the supply of ships.

SLOW steaming very large crude carriers to an average speed of 12 knots could increase fleet utilisation as tonnage is absorbed on voyages of longer durations, A new time charter clause for slow and super slow steaming will be published shortly by BIMCO. The clause was adopted by the Documentary Committee subject to the drafting team conducting a pre-publication review of some of the key features of the clause. The team met in London on 30 November and made a number of improvements to the layout and structure of the clause. The clause will now be circulated to all Documentary Committee members before being published by Special Circular along with explanatory notes.

The Clause deals with a number of potentially difficult technical and legal issues as it is designed to cover all types of ships and trades from the container to the bulk sector. The technical aspects have been resolved and clarified with the assistance of engine designers Wartsila and MAN Diesel. Two types of slow steaming are contemplated by the Clause: Slow steaming down to a level which would not require the owners to make any modifications to the engine – basically the cut-out point for the engines auxiliary blowers; and, should the owners and charterers agree that the vessel can slow steam to a greater degree, then an additional optional provision is given to deal with “ultra” slow steaming – which will apply only in a few cases.

In all cases the master retains the right to refuse to slow steam as the right of the charterers to order slow steaming is subject to the obligations of the master in respect of the safety of the vessel, crew and cargoThe trend to run many ships at speeds of 16 knots or even less is stoking problems for main engines

All six members of the Bloomberg Tanker Index (TANKER) from Frontline to General Maritime Corp. will lose money this year as fleet capacity exceeds the number of cargoes, We’ve had the longest period of sustained upturn in the history of the tanker markets until 2008,” Serck-Hanssen said.
Frontline, also based in Hamilton, will report a net loss of $228.3 million for this year, compared with 2010 net income of $161.4 million, the mean of 20 estimates showed. The company said Nov. 22 it would pay no third-quarter dividend and may run out of cash in 2012. The shares slumped 83 percent in Oslo this year, valuing Frontline at 1.99 billion kroner ($345 million). General Maritime, the New York-based operator of 29 tankers, filed for bankruptcy protection on Nov. 17.

BIMCO is the largest of the international shipping associations representing ship-owners controlling around 65 percent of the world’s tonnage and with members in more than 120 countries drawn from a broad range of stakeholders having a vested interest in the shipping industry, including managers, brokers and agents. read

Baltic Dirty Tanker Index down John Fredriksen up

John Fredriksen and daughter Kathrine Fredriksen was over 1 billion richer in the past week  [1Norwegian Krone equals 0.17 US Dollar]

Over the past two years the changing tide of the industry has caused a collapse in crude freight rates. The Baltic Dirty Tanker Index, which measures the cost to move oil across the sea, has sunk to around 638 recently from 1,077 in January 2010, even as the global economy has improved.

At the same time, the global tanker fleet hasn't adjusted to the reduced haulage demand. This year, the total capacity of tankers in the global fleet is likely to grow 4.6%, and next year tanker supply is expected to rise 1.9%, according to a January-dated report from Clarkson Capital Markets. That far surpasses Clarkson's projected demand growth of 2.3% for 2013 and 1.5% for 2014.

"There is such an overhang with supply that to say that freight rates will increase in the out years is premature

 Frontline Ltd., which operates a large fleet of very large crude tankers (VLCCs), will lose $2.33/share this year in earnings and $2.09 next,  the recent price of $1.93. Global Hunter has an even worse view for the stock, with the price headed to 50 cents.

Nordic American Tankers Ltd., which operates a tanker fleet, is expected to lose money this year and the next. The stock was recently trading at $9.16.

The International Energy Agency forecasts that the US will overtake Saudi Arabia and Russia as the world's top oil producer in seven years and will become a net oil exporter around 2030.

U.S. crude oil exports doubled in February to a 13-year high of 124,000 barrels per day (bpd), government data showed on April 29+, as shipments of surplus shale crude to Canada gathered pace.   Most of the exports have flowed from the Bakken oil fields in North Dakota to plants in Canada's east, which lack pipeline access to Alberta's oil sands and are dependent on foreign crude. The exports have not generated significant domestic opposition, since Canada remains a huge net exporter of oil to the United States, sending around 2.7 million bpd south from both conventional and growing tar sands production.

[April 9]
Hire rates for very large crude carriers on the benchmark voyage between Saudi Arabia and Japan slipped 0.2 percent to 31.91 industry-standard Worldscale points. Costs declined 6.3 percent April 2. Each of the ships can hold 2 million barrels of oil.

There are 87 tankers available in the gulf over the next 30 days. The global VLCC fleet’s total carrying capacity will rise 5.1 percent this year, above demand growth of 4.9 percent.
 Frontline Ltd.’s shares fell to the lowest since May 1999 in March and slumped 95 percent since the end of 2007. The stock slid 1.5 percent to 12.75 kroner by the close in Oslo trading April 2.

VLCCs are losing $3,012 daily on the benchmark Saudi Arabia-to-Japan voyage, figures from the Baltic Exchange in London showed. That compared with a $29-a-day loss as of March 28.


[September 10, 2012] John Fredriksen bases his latest investments on the plunging prices of vessels rather than on economic and petroleum growth forecasts, which he says are too uncertain to be useful. At $535 million, the cost of a deep-water rig in Singapore yards is down 31 percent from its 2008 peak, and Chinese and South Korean shipbuilders are accepting new supertanker orders for about $80 million, half of what they cost at their high in 2007.
“Basically, I’m a trader,” says Fredriksen, who rarely talks to the media. “I think as we are sitting here we are very close to the bottom of the market, and I like to be a buyer at the bottom. This is the game.”


[May 28'11]The Commodity Futures Trading Commission sued two traders and the companies they worked for, Arcadia Energy (Suisse) SA and its Parnon Energy Inc. affiliate, alleging that in 2008 they amassed and sold off a substantial position in physical crude oil to "manipulate future prices." The companies are controlled by John Fredriksen's Farahead Holdings, of Cyprus.
The VTN Shipping group is actively involved in the multiple facets of chartering, ship management and ship owning.

It is a wholly owned subsidiary of Farahead Holdings Limited forming part of a group of companies which include
Frontline, SeaDrill, Arcadia Petroleum and Golar LNG Ltd.

The VTN Shipping Group has been incorporated in Cyprus since November 2006.

Vessel's name: V8 Stealth Last updated: May 20, 2011
Ex-name(s): Not Applicable IMO number: 9436018
Flag: Marshall Island Call sign: V7SW7
Port of Registry: MAJURO Summer DWT: 112871 MT
Type of vessel: Oil Tanker Built: Nov 23, 2009
Type of hull: Double Hull Owner: MAYHEM CRUDE Inc
Class Society: American Bureau of Shipping Operator: NAVIG8 SHIPMANAGEMENT PTE LTD

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Kathrine Fredriksen is a board member of oil trading company Arcadia Petroleum