MARKET REPORT - WEEK 34

VLCC
It was another lackluster week on the VLCC front as Eastbound rates continued their downward slide, sagging below the psychological barrier of ws50 which many owners hoped would not be crossed. As charterers continued to trickle September stems into the market, these cargoes were met with more than ample tonnage, leaving charterers with plenty of choices. This lackluster trend appears set to continue in the short term as the list of available tonnage is simply too great relative to the number of cargoes. With little now remaining in their arsenal, the only alternative to present rates for owners is to simply drop anchor and wait for better days. Those owners who are not already anchored in waiting can slow steam as waiting time is inexpensive, but the affect on the market of such a tactic at this point in time is largely negligible.

We report 29 fixtures for the week; 20 emanating from the MEG and 9 in the Atlantic basin. Of the 20 MEG fixtures, just one - to the UKC - was for West discharge. The MEG-East market was led by fixtures bound for China and South Korea, with 7 and 6 such fixtures, respectively. Eastbound rates commenced in the low ws50s but quickly fell to the ws49 level where they have remained for the remainder of the week. The one Westbound fixture reported this week was at the ws38.5 level, a touch above the present assessment of ws37.5.

Looking ahead to next week, the expectation is that rates will hold as owners point to lack of incentive at levels much lower to assume the voyage, save for those vessels which need to reposition. With the August program now complete at 103 fixtures (well below the 113 completed in July), the concentration is on first half September stems where we expect a monthly total in line with this year's average of 105. As charterers continue to progress into their September programs, 42 cargoes have already been covered, leaving perhaps another 27 cargoes through the first two decades of the month. With 60 units (48 double hull) projected to be load ready through the same space of time, the imbalance is apparent. The question now is how much lower will rates fall, or a better question where will Owners draw the line in the sand? As we are quickly approaching levels where it makes more sense for Owners to sit.

With 9 fixtures in the Atlantic Basin it proved a rather busy week, especially considering that the falling Suezmax basically took the VLCCs out of play. The one westbound fixture we did see was earlier in the week at ws52.5, and with the Suezmax rate at ws65, VLCCs will have to be lower to come back into play. Although the list of available units is not too overly populated, ballasters from the east will come to the region due to the falling eastern sector, putting further downward pressure on rates.

Suezmax
The Atlantic Suezmax market lost a bit of ground this week as tonnage remains in excess of demand. Having commenced in the low ws70s, the market concluded in the high ws60s. With rates appearing to have found their floor, we expect rates to hold stead for now.

Aframax
The Caribbean Aframax market commenced the week in the low ws110s. A brief flurry of inquiry at mid-week saw rates rise to ws120, but the gains were quickly evaporated and the market concluded at the ws110 level. We expect rates to hover at this level at the start to the week ahead.

Panamax
The Caribbean Panamax market was marked this week by ample available tonnage as evidenced by the fact that one charterer was able to achieve last done levels on a prompt replacement fixture. Rates were generally flat at the ws120 level.

The trans-Atlantic market was extremely quiet and rates were only tested once with charterers able to achieve rates at the ws125 level for a Med/USG cargo. With the quiet on both sides of the Atlantic, we expect that rates will hold steady.

The Ecuador market was flat with light enquiry. Rates held at ws160.

CPP
A flat week describes the Atlantic Basin clean for the last full week
of August. Even with European bank holiday and impending three-day Labor Day holiday weekend in the U.S., there was no rush to fix ships. Charterers had their pick of positions on all fronts. TC2 remained in the low ws130s with a couple fixtures breaking that level, with most Owners just cutting to the chase and getting on with it. The same story prevailed in the Caribbean and US Gulf this week, quick fixtures at flat levels to keep the ships moving.

TC2 finished the week just shy of the ws135 mark, while TC3 was still a soft ws125. We look forward to seeing if there will be any changes next week as charterers look forward deeper into September laycans and more participants return from end-summer holidays.