FLOATING STORAGE FLATTENS THE FORTUNES OF FIFTY … · $100 $150 $200 $250 $300 $350 May-15 Jul-15...
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The prices of WTI and Brent crude briefly rose above $50/bbl during intraday trading on Thurs- day, the highest level seen since the end of July 2015, giving traders a brief moment of opti- mism. But since then, prices have trended downwards. WTI currently hovers around the $48.92/bbl mark on NYMEX. Similarly, Brent is trading at around $48.91/bbl on ICE. Analysts expect a further correction in crude prices because supply remains so abundant. Iran’s oil exports are expected to rise a further 200,000 bbl to reach 2.2m bpd by the middle of this summer. Last Friday, rig counts in the US did not decline for the first time in 17 weeks, pos- sibly indicating that America intends to ramp up oil production again. Meanwhile, disruptions to supply such as wildfires in Canada and unrest in Nigeria appear to be resolving themselves. Global oil stockpiles, including floating storage, have increased for the past 10 consecutive quarters – and there’s a lot of oil in floating storage. A senior derivatives trader at Global Risk Management told the WSJ this week that if oil prices hit $51 or $52/bpd they could fall again by $6-$10 because of the volumes stored at sea. It is estimated that almost 9% of the global VLCC fleet is currently booked for floating storage, which is a 40% increase in tankers by number since December. Reuters last week reported that at least 40 laden VLCCs anchored off Singapore as floating storage, storing estimated vol- umes of up to 47.7m bbl, thought to be the highest level in at least five years. Rather than the prospect of arbitrage opportunities on the horizon, traders have been enticed to store oil at sea by the cost efficiencies created by cheap oil and falling VLCC charter rates during the first quarter. Morgan Stanley estimates the current one-month arbitrage on Brent in floating storage arb is -$0.48/bbl, while the 12-month arbitrage is -$6.11/bbl, implying there is no profit incentive to store oil on ships. FLOATING STORAGE FLATTENS THE FORTUNES OF FIFTY-DOLLAR CRUDE
Transcript of FLOATING STORAGE FLATTENS THE FORTUNES OF FIFTY … · $100 $150 $200 $250 $300 $350 May-15 Jul-15...
The prices of WTI and Brent crude briefly rose above $50/bbl during intraday trading on Thurs-day, the highest level seen since the end of July 2015, giving traders a brief moment of opti-mism. But since then, prices have trended downwards. WTI currently hovers around the $48.92/bbl mark on NYMEX. Similarly, Brent is trading at around $48.91/bbl on ICE.
Analysts expect a further correction in crude prices because supply remains so abundant. Iran’s oil exports are expected to rise a further 200,000 bbl to reach 2.2m bpd by the middle of this summer. Last Friday, rig counts in the US did not decline for the first time in 17 weeks, pos-sibly indicating that America intends to ramp up oil production again. Meanwhile, disruptions to supply such as wildfires in Canada and unrest in Nigeria appear to be resolving themselves.
Global oil stockpiles, including floating storage, have increased for the past 10 consecutive quarters – and there’s a lot of oil in floating storage. A senior derivatives trader at Global Risk Management told the WSJ this week that if oil prices hit $51 or $52/bpd they could fall again by $6-$10 because of the volumes stored at sea.
It is estimated that almost 9% of the global VLCC fleet is currently booked for floating storage, which is a 40% increase in tankers by number since December. Reuters last week reported that at least 40 laden VLCCs anchored off Singapore as floating storage, storing estimated vol-umes of up to 47.7m bbl, thought to be the highest level in at least five years.
Rather than the prospect of arbitrage opportunities on the horizon, traders have been enticed to store oil at sea by the cost efficiencies created by cheap oil and falling VLCC charter rates during the first quarter. Morgan Stanley estimates the current one-month arbitrage on Brent in floating storage arb is -$0.48/bbl, while the 12-month arbitrage is -$6.11/bbl, implying there is no profit incentive to store oil on ships.
FLOATING STORAGE FLATTENS THE
FORTUNES OF FIFTY-DOLLAR CRUDE
$100
$150
$200
$250
$300
$350
May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16
HOUSTON ROTTERDAM SINGAPORE FUJAIRAH
COMMENT
While HFO prices seem to have stabilised after the rally seen in the last few weeks, MGO figures have picked up the pace with double-digit week-on-week increases across the board.
$0
$100
$200
$300
$400
$500
$600
$700
$25
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16
CRUDE (WTI) CRUDE (BRENT) IRON ORE (PLATTS)
COAL (RB INDEX) WHEAT (CBT)
COMMENT
Oil prices finally breaking the long-awaited $50 level; iron ore instead now back into the forties despite some encouraging perfor-mances over the last few weeks.
95
100
105
110
115
120
125
130
0.95
1.05
1.15
1.25
1.35
1.45
1.55
1.65
May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16
GBP / USD EUR / USD USD / JPY
CURRENCY PAIR PRICE
GBP / USD 1.46939
EUR / USD 1.1177
USD / JPY 109.84
USD / KRW 1179.11
COMMENT
Mixed reports this week on the FX front, on the back of uncertainties about a likely FED interest rate hike in June or July.
PORT 380 CST [$/ton] MGO [$/ton]
HOUSTON 219.5 462.5
ROTTERDAM 222.5 440.5
SINGAPORE 230.0 438.5
FUJAIRAH 246.5 505.5
CURRENT WEEKLY
COMMODITY PRICE CHANGE(+/-)
CRUDE (WTI) 49.11 0.58
CRUDE (BRENT) 49.14 0.64
IRON ORE (PLATTS) 49.9 -5.8
COAL (RB INDEX) 52.9 0.4
WHEAT (CBT) 477 11
BUNKER PRICES ($)
COMMODITY PRICES ($)
KEY CURRENCIES
*Arrows only indicate the movement compared to the past week hence not necessarily the market trends
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
$8,000
$8,500
$9,000
0.5 1 2
PERIOD [YRS]
Atlantic Term Structure
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE ULTRAMAX
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
0.5 1 2
PERIOD (YRS)
Pacif ic Term Structure
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE ULTRAMAX
ATL PAC ATL PAC ATL PAC
HANDY (32k dwt)
6,500 5,000 6,000 5,000 5,500 5,200
SUPRA (56k dwt)
7,000 5,500 6,500 5,500 5,650 5,350
ULTRA (62k dwt)
7,150 5,800 6,400 5,900 5,650 5,450
PANA/KMAX (76k-82k dwt)
5,800 5,300 6,000 5,500 6,500 6,000
CAPE (170k dwt)
7,800 7,800 8,000 8,000 8,500 8,500
DRY TIME CHARTER ESTIMATES - NON ECO TONNAGE
1 YR 2 YR6 MOS
DRY
SIZE THIS WEEK LAST WEEK CHANGE (+/-)HANDYSIZE 347 342 5SUPRAMAX 575 558 17PANAMAX 586 617 -31CAPESIZE 793 906 -113
BDI 601 634 -33
BALTIC DRY INDEX
0
500
1000
1500
2000
May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16
Baltic Dry Index
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE BDI
COMMENT
Dry sector started sluggish again this week, especially for the bigger vessels.
Market lacks of new period fixtures while there is not much activity in the spot market as well.
Panamaxes’ Pacific trips, achieved slightly softer rates as only prompt tonnage is getting covered.
Bad news for the Capes as well with very soft activity, as the news for the Chinese steel was not very encouraging.
0
4,000
8,000
12,000
16,000
20,000
6 Months Atlantic TC Rates
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE
0
4,000
8,000
12,000
16,000
20,000
6 Months Pacif ic TC Rates
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE
0
4,000
8,000
12,000
16,000
20,000
2 Year Atlantic TC Rates
HANDYSIZE SUPRAMAX PANAMAX CAPESIZE
VESSEL SIZE BUILT PERIOD DELIVERY RATE CHRTR
FULVIA 93 2010 3-5 MOS ZHUHAI $4,750 PANOCEAN
TRADEQUEST 82 2016 12 MOS - $6,500 LOUIS DREYFOUS
SEATRUST 81 2013 12 MOS - $6,250 PVT
DARYA DEVI 81 2013 11-13 MOS - $5,850 PVT
ARTEMIS 77 2006 11-14 MOS PORT KELANG $5,500 BUNGE
NAIAS 73 2006 5-7 MOS KOHSICHANG $5,000 BUNGE
SPAR OCTANS 64 2015 4-6 MOS BARRANQUILLA $10,000 WBC
PERIOD FIXTURES
400
500
600
700
800
900
1000
1100
Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16
DIRTY
CLEAN
*Arrows only indicate the movement compared to the past week hence not necessarily the market trends
$0 $10,000 $20,000 $30,000 $40,000
1
2
3
5
PER
IOD
[Y
RS]
Term Structures
VLCC SUEZ AFRA LR2 LR1 MR HANDY
1 YR 2 YR 3 YR 5 YR
HANDY 14,500 14,750 15,500 14,500
MR IMO3 15,750 16,750 16,250 15,500
LR1 17,000 18,500 18,000 18,000
LR2 (115 dwt cpp & dpp) 23,000 24,500 23,500 23,500
AFRA (115dwt) 23,000 24,000 22,750 22,000
SUEZ 27,500 28,500 27,500 26,500
VLCC 40,000 38,500 35,000 34,500
WET TIME CHARTER ESTIMATES - NON ECO TONNAGE
WET
THIS WEEK LAST WEEK CHANGE (+/-)CLEAN 747 732 15CLEAN 473 484 -11
BALTIC TANKER INDEX
$10,000
$30,000
$50,000
May-15 Aug-15 Nov-15 Feb-16 May-16
1 Year TC RatesHANDY MR LR1 LR2
AFRA SUEZ VLCC
$10,000
$30,000
$50,000
May-15 Aug-15 Nov-15 Feb-16 May-16
2 Years TC Rates
HANDY MR LR1 LR2
AFRA SUEZ VLCC
$10,000
$30,000
$50,000
May-15 Aug-15 Nov-15 Feb-16 May-16
3 Years TC RatesHANDY MR LR1 LR2
AFRA SUEZ VLCC
$10,000
$30,000
$50,000
May-15 Aug-15 Nov-15 Feb-16 May-16
5 Years TC RatesHANDY MR LR1 LR2
AFRA SUEZ VLCC
COMMENT
Oil prices are expected to be held down, as producers likes Iran and Iraq will offset disruption from higher cost producers.
Tanker market activity is very slow as oil traders are willing to risk a loss on cargoes as they load barrels onto tankers for storage.
VLCCs are trading at $39,500 period fixtures while Afras & MRs are trading at $22,500 and $23,000 per day for 1 YR TCs respectively.
VESSEL SIZE BUILT PERIOD RATE CHRTR
AL JALAA 115 2007 9 MOS PVT NAVIG8
SONGA CORAL 107 2005 2 YR $23,000 PANOCEAN
ATHINEA 107 2006 6 MOS RNR ST SHIPPING
MR PEGASUS 51 2009 1 YR $16,000 SHELL
IVER EXAMPLE 47 2007 6 MOS $15,000 KOCH
FIDELITY 47 2004 1 YR $16,000 NANJING PETROLEUM
STENA WECO RLT x 2 51 - 1YR $16,500 UNION MARIME
PERIOD FIXTURES
0 M $
5 M $
10 M $
15 M $
20 M $
25 M $
30 M $
35 M $
CAPE PANA SUPRA HANDY
Dry S&P Estimates
0 yrs 5 yrs 10 yrs
2013 2014 2015 2016
Bulker 449 $/ldt 400 $/ldt 295 $/ldt 250 $/ldt
DEMOLITION PRICES
2013 2014 2015 2016
Tanker 476 $/ldt 420 $/ldt 310 $/ldt 280 $/ldt
DEMOLITION PRICES
0 M $
20 M $
40 M $
60 M $
80 M $
100 M $
120 M $
VLCC SUEZ AFRA LR1 MR
TANKER S&P ESTIMATES
0 yrs 5 yrs 10 yrs
SALE & PURCHASE
VESSEL DWT BUILT PRICE ($M) BUYER
NEW CORAL 297.5 2010 60 FRONTLINE
NEW MEDAL 297.5 2009 57.5 FRONTLINE
HAMILTON SPIRIT 159 2009 47M PVT
BERMUDA SPIRIT 159 2009 47M PVT
KING EMERALD 39 2004 45 CPO
KING EDWARD 39 2004 45 CPO
KING ERNEST 39 2004 45 CPO
KING EVEREST 39 2001 45 CPO
FAIRCHEM BRONCO 20 2007 20.5 PVT
DA WEI SHAN 6 2009 12.2 PVT
WET S&P
VESSEL DWT BUILT PRICE ($M) BUYER
BESIKTAS TURKMENISTAN 179 2011 23.0 GREEK
GRAND OCEAN 82 2012 12.4 PVT
MIRAREO ACE 82 2012 14 PVT
OCEAN QINGDAO 76 2011 11.5 PVT
NB RESALE DE031 61 2016 19.9 PVT
CS VANGUARD 34 2004 3.5 GREEK
SAINT DIONYSIS 32 2002 3.3 PVT
ORIENT DREAM 32 2008 7 PVT
DILIGENCE 28 1995 2.1 CHINESE
KENANGA 27 1996 1.7 CHINESE
DRY S&P
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
6 MOS 12 MOS 18 MOS 24 MOS
DRY FFA
HANDY SUPRA PANA CAPE
- 10,000 20,000 30,000 40,000
1MOS
2MOS
3MOS
12MOS
WET FFA
TC6 TC2 TD7 WET FFA TD3
PERIOD TD3 TD7 TC2 TC6
1 MOS 45,700 21,500 10,000 8,600
2 MOS 37,000 20,000 10,500 9,700
3 MOS 32,400 19,800 9,500 9,800
12 MOS 32,300 25,300 9,700 11,500
WET FFA
PERIOD HANDY SUPRA PANA CAPE
6 MOS 4,750 5,750 5,200 7,200
12 MOS 4,800 5,500 5,100 6,550
24 MOS 4,950 5,850 5,550 7,250
FFA DRY
FFAs
Please note all details are believed to be correct without guarantee.
ALIBRA SHIPPING LIMITED
1st Floor, 35 Thurloe Street, South Kensington, London, SW7 2LQ
Tel: + 44 (0) 20 7581 7766 Fax: + 44 (0) 20 7581 7760
Email: [email protected] dry@al ibrashipping.com
