2024.09.20

VLCC owners accept rate discounts to optimize short-haul western positioning

VLCC owners are strategically accepting discounted rates for voyages west of Suez to keep their tankers in position for a strengthening short-haul market. Spot rates are climbing, with Middle East Gulf to China routes increasing by 8% week on week, reaching $34,700 per day. Eco ship earnings have risen to $43,100 per day, according to Clarksons Securities. Analysts expect rates to continue rising as seasonal demand picks up and available tonnage tightens. While voyages east of Suez are still commanding a premium, short western trips are becoming more attractive to owners aiming to capitalize on fourth-quarter demand. In the meantime, Asian holidays have tempered market activity, but demand is expected to surge with October cargoes. Despite tightening tonnage east of Suez, US crude exports have been weak, partly due to Hurricane Francine, though price differentials could drive more Atlantic oil imports to Asia in the near future.

[SLOW] Daily VLCC Market _ VLCC TCE comparison by routes

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Suezmax tanker rates surge to seven-week high amid signs of a strong winter market

Suezmax tanker rates have surged to their highest levels in seven weeks, marking a 21.6% increase since Monday and sparking optimism for a seasonal market upswing. Rates for time-charter equivalent earnings hit over $27,700 per day, with indicators suggesting a strong winter market ahead. The US Gulf Coast has emerged as the key driver of this upward trend, with WorldScale (WS) rates for Houston-to-Europe voyages rising from WS 60 to WS 68. Freight futures predict further increases, with rates on the West Africa-to-Europe route expected to reach WS 110 by December, typically the market's winter peak. Shipbroker Fearnleys notes that while it's too early for dramatic predictions, the market is showing signs of excitement and strength heading into the winter season.

[SLOW] Suezmax Market Monitor _ Suezmax TCE comparison by routes

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Red Sea shipping insurance costs surge as Houthi threats intensify, insurers pull back

Insurance costs for ships transiting the Red Sea have surged, with premiums rising from 0.7% to up to 2% of a vessel's value since early September, as threats from Yemen’s Iran-backed Houthis escalate. The Houthis, who launched missile and drone attacks on ships in November in solidarity with Palestinians in Gaza, have sunk two vessels, seized one, and killed three seafarers. Following the attack on the Greek-operated tanker Sounion, which burned for weeks, many insurers have stopped offering coverage for Red Sea transits. Smaller insurers are increasingly pulling back, while those still covering ships have raised premiums and become more selective, especially with vessels seen as likely targets. Insurers like Brit and others have provided war risk policies for affected vessels, but costs and risks are climbing amid the ongoing conflict.

[SLOW] https://slowspace.io/ Satellite Red Sea

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[SLOW] https://slowspace.io/ _ Gulf of Finland

Finnish officials warn of impending risk from Baltic sea’s shadow fleet

Finnish maritime authorities are raising alarms about the dangers posed by the shadow fleet—unauthorized or poorly maintained tankers sailing through the Baltic Sea. Carolus Ramsay, Head of Maritime Policy at the Finnish Shipowners Association, expressed concerns about the high risk of a maritime disaster, particularly as winter approaches and ice begins to form. These vessels often lack proper inspection and safety measures, such as ice-strengthened hulls, and operate with unreliable automated identity signals. The risk is exacerbated by the narrow, congested waterways and frequent passenger ferries, particularly in the Gulf of Finland. Additionally, deliberate disruptions to satellite navigation by Russia further complicate safe navigation. Ramsay highlighted the potential for a major catastrophe if an incident occurs during icy conditions, noting the challenges in politically and legally addressing these issues due to Russia’s strategic interests in the Baltic Sea.

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[SLOW] Weekly Dirty Tanker Research _ VLCC secondhand price by ages

Dynacom's rumoured VLCC sale highlights stable market for older tankers

Dynacom Tankers Management, controlled by the Procopiou family, is rumored to have sold its 2005-built VLCC Sake for over $40 million. If confirmed, this would represent a profitable deal, as the vessel was purchased four years ago for around $37.5 million from NYK Line. The Sake, which lacks a scrubber and is due for a special survey in late 2025, is currently valued at $39.5 million by VesselsValue. This price level aligns with recent market trends, such as the sale of the 2006-built PNS Serena for $42 million. The steady pricing for older VLCCs since February has prompted several Greek owners, including Evangelos Marinakis and Athenian Sea Carriers, to offload VLCCs in recent weeks, reflecting continued market confidence. Dynacom Tankers Management currently operates 17 VLCCs within a fleet of 65 crude and product carriers. The company is positioned to exceed the 100-ship mark as it prepares to receive over 40 new tankers, including panamax, LR2s, suezmaxes, and VLCCs, valued at $3.2 billion. These conventionally fueled tankers are scheduled for delivery between 2025 and 2028. The rumored sale of the Sake, a 2005-built VLCC, may indicate an acceleration of older vessel sales, aligning with Dynacom’s fleet renewal strategy. Previously, the company sold one suezmax and one VLCC in 2023, followed by the sale of a younger suezmax in early 2024. If the Sake is sold, Dynacom’s oldest VLCCs would be the Eliza and Ioanna, both built in 2008.

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[SLOW] https://slowspace.io/ Folder Filters Pertamina All PIS tankers

Pertamina's shipping unit to double tanker fleet and embrace decarbonization over next decade

Pertamina International Shipping (PIS), the shipping arm of Indonesia's state energy company, plans to double its fleet of 320 tankers over the next decade. The expansion, announced by CEO Yoki Firnandi at the Gastech conference, aims to modernize the fleet and invest in liquefied natural gas (LNG) transportation, reflecting Indonesia's position as a major LNG producer and exporter. PIS has also committed to decarbonizing its operations by exploring cleaner fuels such as biofuel, methanol, hydrogen, and ammonia. However, uncertainty around which alternative fuel to adopt, combined with a lack of global regulatory alignment, complicates the industry's path to net-zero emissions.

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[SLOW] https://slowspace.io/ _ Hengli Heavy Industries / Hengli Petrochemical

Hengli Heavy Industries secures VLCC newbuildings as shipyard expands capacity

Hengli Heavy Industries, recently revitalized under its parent company Hengli Group, has secured an order for four 306,000-dwt VLCC newbuildings, scheduled for delivery in 2026 and 2027. This marks the second VLCC contract between Hengli and Hengli Group, following a similar deal last year that resulted in the resales of the tankers to a major Greek shipowner. The cost of the newbuildings is estimated to be between $110 million and $120 million each, with the vessels expected to be fitted with scrubbers. Hengli Group, a significant player in the oil refining and petrochemical sectors, has close ties with Saudi Aramco and is poised to benefit from long-term crude oil supply agreements. The group's 400,000-barrel-per-day refinery and extensive petrochemical facilities strengthen its position in the industry. The shipyard, formerly known as STX Dalian, was acquired and restructured by Hengli Group in 2022, investing heavily to expand its shipbuilding capacity. Hengli Heavy's current projects include high-value green ships and advanced offshore equipment. The shipyard is also planning an IPO on the Hong Kong Stock Exchange to raise $100 million for further expansion.

[SLOW] https://slowspace.io/ Trade Flow India seaborne crude imports from Russia by origin ports

Indian refiners pursue joint 2025 Russian oil deals

Indian refiners are collectively negotiating Russian oil supplies for 2025, primarily using Russian insurance for oil priced above the $60 per barrel cap. Russia remains India's largest oil supplier, while India, the world's third-largest oil importer, also secures significant oil from the Middle East. State refiners are buying from spot markets, while private refiners have already signed annual deals for Russian oil this year. Negotiations with Middle Eastern suppliers for 2025 term deals will begin in December, with expectations of better terms due to decreasing global oil demand. India continues purchasing from non-sanctioned Russian entities, benefiting from lower prices and relying on Russian insurers to bypass the G7’s price cap. Payments are made in US dollars, Emirati Dirhams, Rupees, or Chinese Yuan, depending on the oil price.

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Europe’s diesel imports set for 17-month high in September

In September, Europe’s diesel imports are expected to reach a 17-month high, with an estimated 1.36 million barrels per day (bpd), largely driven by increased shipments from the Middle East. This marks the highest import level since April 2023, as Europe continues to source diesel from various regions following its embargo on Russian fuel. Middle Eastern supplies, particularly from the UAE and Oman, are expected to hit their highest levels since 2017, offsetting a slight decline in US diesel shipments. While US shipments remain strong at 409,000 bpd, seasonal refinery maintenance in Europe is expected to reduce local diesel production, increasing reliance on imports. Despite weaker industrial demand, high freight activity and tight supplies are driving demand for diesel in the region.

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[SLOW] https://slowspace.io/ _ Amuay refinery / Cardon refinery

Venezuela’s Amuay refinery restores operations after power outage disruption

The catalytic cracker and two distillation units at Venezuela’s largest refinery, Amuay, have resumed operations after a power outage disrupted them on September 12, according to sources. Amuay, with a capacity of 645,000 barrels per day (bpd), halted fuel production due to frequent power outages caused by chronic underinvestment. Restarting operations took several days. Together with the Cardon refinery, Amuay forms PDVSA’s largest refining complex with a combined capacity of 955,000 bpd. Venezuela’s oil exports recently hit a four-year high despite ongoing U.S. sanctions, with limited licenses issued to Chevron and Spain’s Repsol for joint ventures.

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[SLOW] https://slowspace.io/ _ Cushing, Oklahoma

Cushing oil storage levels plummet as Canadian pipeline shifts supply

Oil-storage levels at Cushing, Oklahoma—a key US crude hub—have plummeted to near decade-lows for this time of year, primarily due to the expanded Trans Mountain pipeline in Canada. Since May, the pipeline has shifted approximately 400,000 barrels per day of Canadian crude away from the US Gulf Coast, leading to a significant drawdown of nearly 13 million barrels at Cushing. Additionally, reduced Canadian flows and increased European demand for US crude, driven by supply disruptions in Libya, have exacerbated the decline. Cushing’s stockpiles now stand at about 22.7 million barrels, less than a third of its total capacity of 78 million barrels. This situation is impacting crude spreads and raising concerns about potential operational challenges at the hub.