2024.08.20

VLCC time charter market surges as big players lock in multi-year deals amid rising spot rates

The VLCC market has seen a significant uptick in time charter activity, with seven new period charters reported in recent weeks. Major players like Maran Tanker Management and Sinokor have secured multi-year deals at rates exceeding recent market assessments. Maran Tanker Management's three-year deal with Marathon for the Maran Apollo was set at $55,000 per day. Meanwhile, Sinokor secured multiple charters, including the Advantage Verity and Dijilah, at $53,500 per day for three years each. The spike in activity comes alongside rising spot market rates, with the Baltic Exchange's VLCC time-charter equivalent jumping to $37,010 per day, driven by increased demand in the Middle East Gulf. This surge marks a potential recovery in the market, with rates possibly reaching $70,000 per day during the winter season.

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Torm pursues strategic fleet expansion with opportunistic multi-ship deals

Torm, a leading product tanker company, is strategically expanding its fleet through opportunistic multi-ship acquisitions involving cash and stock deals, rather than large-scale mergers and acquisitions. CEO Jacob Meldgaard emphasized that this approach adds value for both existing and new shareholders. Recent transactions include the purchase of eight MR tankers for $340 million and eight LR2s from SKS Greentankers for $239 million, among others. While Torm has no fixed target for fleet size, it remains open to acquiring vessels that offer value, even as it occasionally sells off older ships. The company is focused on maintaining strategic flexibility and may even reduce its fleet size if needed.

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Canadian oil exports likely unaffected by looming rail strike

A potential labor dispute at Canada's two major railroads, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC), is unlikely to disrupt Canadian oil exports to the U.S. due to available pipeline capacity, particularly after the recent expansion of the Trans Mountain pipeline. While the strike could impact other industries and shipments, Canadian crude exports via rail have declined significantly, with most crude now transported by pipelines - The majority of the 4.2 million barrels per day that the U.S. imports from Canada are transported via pipelines. The current low discount on Western Canadian Select crude indicates little market concern about the potential rail stoppage. However, the strike could affect the transportation of other products like propane and diesel, which rely more heavily on rail logistics. Companies are preparing contingency plans to mitigate any impacts.

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VLCC tanker market faces headwinds as China's shift to LNG-Powered trucks cuts oil demand

The VLCC market is feeling the pressure as China's energy transition, particularly the rapid adoption of LNG-fueled trucks, dampens oil demand. Over 90,000 LNG-powered trucks were sold in China in the first five months of 2024, doubling their market share from the previous year. This shift has contributed to a significant drop in gasoil demand and weakened VLCC rates, which have averaged $51,900 per day this year, down from $60,300 in 2023. The decline is compounded by seasonal market weakness and slower economic growth in China, particularly in the real estate sector. Despite these challenges, analysts note that the petrochemical industry’s growth and new refinery developments in China may offer future support to the crude tanker market, although the benefits are expected to materialize gradually over the next 12 to 24 months.

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New LNG carrier completes Arctic passage on Northern Sea Route with Russian cargo

The newly built Arc4 LNG carrier North Sky has successfully completed a passage through the Northern Sea Route (NSR) to deliver a cargo from Russia’s Novatek to China. The 174,000-cbm vessel, which loaded at Novatek’s Yamal LNG plant, is part of a fleet originally contracted by NYK and Sovcomflot and now managed by Dubai-based White Fox Ship Management. The vessel, reflagged to Panama and re-classed under the Indian Registry of Shipping, is one of several ice-strengthened LNG carriers granted permission to sail the NSR during the summer. This transit highlights ongoing Russian efforts to maintain LNG exports amid international sanctions, with additional LNG carriers reportedly being prepared for similar operations.