MARKET REPORT - WEEK 7

VLCC
With the Chinese New Year slowing things in the East and IP week in London having created a highly fragmented work-week, it was of little surprise that the resulting draw on personal from various offices worldwide translated into quite period for the VLCC markets.

Consequently, we witnessed charterers strategically holding back on their cargo stems, using the inactivity to apply further downward pressure on rates. After an initial standoff, the charterers' tactics showed evident signs of success as Westbound business re-established 25% lower than last done (albeit the last done having taken place over two weeks ago) and eastbound rates slid by a further 10% (following last week's slide of 30%). However, these new lows did bring a fresh influx of cargoes to the market at week's end, slowing the downward pressure and even bringing about some renewed confidence on the owners' side as new building was fixed at higher than last done, whereas normally such tonnage would have likely seen been fixed at a discount. This brought the market back to where it had commenced-a standoff-with charterers again sitting back, waiting to see if their tactics will prove fruitful.

Activity proved to be slightly busier than last week with a total of 19 fixtures reported; 13 emanating from the Middle East and 6 from the Atlantic basin. The former was led by double hull business which accounted for all but one fixture and despite being off on holiday, China remained the leading discharge destination. Eastbound rates on the doubles started the week having slid into the high ws60s but the lack of inquiry further enforced the downward trend, pushing rates into the low ws60's before rebounding back to the mid ws60's. Westbound rates hit a low point as a ws45 paid on a voyage to the USG, although this is on a relets that needs to get back west for its own program. Raising the questions as to whether the rate is repeatable.

Looking ahead to next week, we expect activity to continue to increase as charterers look to finish up the handful of remaining stems for this month and progress into their March program. To date this month we have seen 90 fixtures reported whilst March has just gotten underway with 7 fixtures. Looking at the position list we see 11 ships which remain load-ready for this month and an additional 20 units available through the first decade of March. This leaves a very balanced position list which historically favors the owners and while we certainly expect some more ships to pop up, the question of the ballasters' dedication to the Atlantic could tip this very fine equilibrium in either direction. Before drawing our conclusion, we first look to the Atlantic as it plays a ubiquitous roll in this week's discussion.

The Atlantic basin was quiet with only 6 fixtures reported, all destined for the East as trans-Atlantic business continued to be concentrated on the Suezmax class; those rates steadily firming over the week into the high ws90's. With the Suezmax rates looking to hold steady, the delta between the two classes should bring the VLCCs back into play for Westbound business. The position list remains tight and we expect CBS/East rates to hold in the low/mid $4 mill. region due the limited USG and ECC positions available. East and TA rates will have interest from ballasters, thus holding rates steady.

Anticipated activity will be the driving force next week and while March is quickly approaching, charterers' patience will be enough to hold rates steady with the Eastbound level holding in the mid ws60's while westbound rates move into the high ws40's.

Suezmax
On the back of fresh enquiry for cargoes emanating from West Africa, the Atlantic Suezmax market ended with rates remaining firm throughout the week. Having commenced the week at the ws87.5 level, rates ended the week up by 11% at the ws97.5 level.

Aframax
The Caribbean Aframax market commenced the week at the ws157.5 level. As the week progressed, the supply/demand ratio became further disconnected and, save for some date sensitivity during the first half of the week, the market corrected towards the end of the week to reflect the oversupply of tonnage to end the week at the ws147.5 level.

Panamax
Weak. This word is defined as: 'not strong; liable to yield, break, or collapse under pressure or strain; fragile; frail' and can aptly describe the Panamax this week. The CBS-USAC market shed nearly 15% percent this week to close at the ws150 level. The Trans-Atlantic market also remained quiet, we expect rates to slip further to below the ws170 level in the week ahead. The only market which held steady (mostly due to a lack of inquiry) was the Ecuador-USWC market which held at ws197.5 but, nevertheless, is expected to shed a few points in the week ahead failing any significant change in enquiry levels.

Products
The affect of the occurrence of US President's Day, IP week in London, the Chinese New Year all during the same week unsurprisingly did little to help improve the clean markets. Activity on the Continent was limited throughout week, both towards the US and West Africa. Rates Cont/States hovered around 37 by ws175, although we did see a few deals done both above and below this level.

Towards the week's end, activity for cargoes emanating from both the Caribbean and the US Gulf did appear to pick up a bit and accordingly a number of vessels disappeared from the position lists. PMI were reportedly seeking to replace some tonnage late tonnage, and there were a few cross-Caribbean voyages quoted in the open market. Backhauls towards Europe remain the exception rather than the rule, but cargoes emanating from the US Gulf bound for the Mexican east coast and the Caribbean continued to be the market drivers. Caribs/Upcoast voyages remain at 38 by ws135, despite the thinning tonnage list.