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Re: Supertankers going in circles, waiting for price to rise

Unread postPosted: Thu 29 Jan 2009, 12:29:31
by davep
Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators to store crude and bet that prices will appreciate later in the year.
Su’s Taipei-based company, TMT Co. Ltd., will lease out its 2 million-barrel vessels at below-market prices in return for a share of any profit from the trade on the oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said. [...]

I think prices will continue to drop as demand drops this year, especially when they run out of places to store it.

Re: Supertankers going in circles, waiting for price to rise

Unread postPosted: Thu 29 Jan 2009, 12:40:43
by ReverseEngineer
davep wrote:
Shipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators to store crude and bet that prices will appreciate later in the year.
Su’s Taipei-based company, TMT Co. Ltd., will lease out its 2 million-barrel vessels at below-market prices in return for a share of any profit from the trade on the oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said. [...]
I think prices will continue to drop as demand drops this year, especially when they run out of places to store it.

Now there is a desperate Pigman. If he can't find investors to store Oil in his boats, how long can he keep up the mortgage payments on them? How long before the bank sends the Repo man for his Supertankers?

You gotta know this guy is leveraged up to beat the band. It should explain to you why the Pigmen are getting hit first here, and how quickly they can lose it all. Oh sure, I would think most of them have a few million stashed in private accounts, but that is chump change to a Pigman and won't keep up the payments on the Gulfstream and the Bentley and more importantly loses them their Invitation to next year's Davos Conference. A Pigman without Money is like a Porn Stud with Erectile Dysfunction. He's got no reason to live anymore.

Reverse Engineer

Re: Supertankers going in circles, waiting for price to rise

Unread postPosted: Thu 29 Jan 2009, 19:54:49
by jamest
highlander wrote:Now a couple of the big banks getting US taxpayers money to "bail them out" are looking for a bunch of tankers to hold their oil until t he prices go back up. So the speculators are back at it, this time with our money. ARRRRRRRR


Do you have a reference on this? I'd love to know which banks are doing this.

Tanker Rates Fall

Unread postPosted: Sat 04 Apr 2009, 11:38:36
by eastbay
http://www.bloomberg.com/apps/news?pid= ... fer=energy


Maybe someone might want to comment on this article I found on Bloomberg:

Does this mean that the millions of bbls of crude that were floating in storage on tankers these past few months have been unloading their cargoes thereby resulting in an increase in the number of available tankers thus causing a drop in tanker rates?

If so, that could mean the recent run-up in crude inventories may be coming to an end which should cause crude inventories to initially stabilize, then begin to drop in the coming weeks forcing oil prices to rise as summer approaches.

Any thoughts on this?

Re: Tanker Rates Fall

Unread postPosted: Sun 05 Apr 2009, 03:23:56
by TheDude
Here's another piece from Reuters dated March 26th: Teekay Tankers Ltd. Charter Extension Contributes to Sustainability of Dividends | Reuters

HAMILTON, BERMUDA, Mar 26 (MARKET WIRE) --
Teekay Tankers Ltd. (Teekay Tankers) (NYSE: TNK) today announced a
nine-month extension of the time-charter contract for the Aframax tanker
Everest Spirit at a rate of $26,500 per day. This contract extension
brings the number of Teekay Tankers vessels operating under fixed-rate
contracts to seven out of an eleven-ship fleet, or 62 percent of
operating days for 2009.

"The extension of the fixed-rate contract for the Everest Spirit is an
example of the active commercial management of our fleet," said Bjorn
Moller, Teekay Tankers' Chief Executive Officer. "The sustainability of
dividends in today's uncertain economic times is a significant concern
among investors. By chartering out more of our ships for various periods
through the end of 2011, we expect to maintain a strong dividend
regardless of strength or weakness in the spot tanker market. As a result
of our fixed-rate charter contracts, we can pay a dividend even if our
spot tanker fleet does not earn any cash flow. For example, if spot
tanker rates were to decline to an average of $10,000 per day for both
Aframaxes and Suezmaxes, we would still be able to pay a dividend in 2009
in excess of $0.90 per share."

At present, more than 85 percent of Teekay Tankers' first quarter fleet
days were booked at average rates of approximately $23,000 per day and
$39,000 per day for the spot Aframax and Suezmax fleets, respectively.


This site has heaps of info: 'Prevailing gloom' in the VLCC spot market

The rate of WS 35 for MEG-East voyages is at a seven-year low.
According to Bassøe “VLCC activity in West Africa is also suffering” as rates softened from WS 50 to around WS 47.
“There is no bottom in sight for VLCC spot rates currently and many owners are not breaking even,” a Singapore-based broker told Tankerworld.
“OPEC is supposedly trying its best to cut 4.2 million barrels per day (bpd) from the market. Full compliance is equivalent to at least two VLCCs out of a job every day."
Owners' earnings now stand at around $27,000 per day per vessel for benchmark MEG-Korea voyages while the MEG-UKC route is fetching only $12,000 per day per vessel.


Their main page is huge - will take a while to load even with fast connection. They're porting stuff from TankerWorld, a subscription site.

Re: Tanker Rates Fall

Unread postPosted: Sun 26 Apr 2009, 12:42:11
by TheDude
Remember negative rate T Bills? From the 20th: FT Alphaville » Blog Archive » Tanked

As shipping news provider Lloyd’s list wrote on Friday:

TANKERS are being chartered for voyages at spot rates that fail to cover bunker and port costs, as earnings dramatically plunge across all tanker types in both dirty and clean trades. Worldscale rates for clean tankers operating on some major routes are now translating to dollar-per-day earnings of less than zero, according to derivatives broker, Imarex. The rates decline has sharply accelerated this month, pushing rates below $10,000 per day for aframax, suezmax and very large crude carriers on all but a handful of world’s key tanker journeys, and well below operating costs for most owners.

The case is particularly worrisome for the world’s VLCC routes (very large crude carrier). As Lloyd’s List explains:

On the world’s largest VLCC trading route, from the Middle East to Japan, rates have fallen to under $8,000 per day, just over 10% of the $70,000 per day seen at the beginning of 2009. “There’s no reason why the market should be where it is,” said Frontline acting chief executive Jens Martin Jensen. “It doesn’t make any sense. If [a crude oil trader] pays $50 a barrel and you have 2m barrels on board [a tanker] worth $100m, who cares if you are paying $10,000 or $20,000 per day? It doesn’t make any difference. It’s weakness in certain owners minds.”


Ship Chartering: VLCC rates at 11-year lows, scrap now says Frontline

Singapore: With VLCC rates at their lowest in at least 11 years owners will scrap ships and cancel orders for new ones, according to Frontline Ltd., the world’s largest VLCC operator. VLCCs are making $4,335 a day after fuel costs for delivering Middle East crude to Asia and the U.S., according to data from the London-based Baltic Exchange. Hamilton, Bermuda- based Frontline said February 26 it needs $12,000 to cover costs such as repairs, crew, insurance and lubricants for engines. Interest on loans takes the figure to $32,100. “We will see scrapping happening soon, then we will see massive cancellations in the order book,” Singapore-based Jens Martin Jensen, temporary chief executive officer of Frontline’s management unit, told Bloomberg. “I don’t think this market is going to last until 2011.”

Re: Tanker Rates Fall

Unread postPosted: Sun 26 Apr 2009, 15:42:46
by the48thronin
eastbay wrote:http://www.bloomberg.com/apps/news?pid=20602099&sid=aO8N7twunfLc&refer=energy


Maybe someone might want to comment on this article I found on Bloomberg:

Does this mean that the millions of bbls of crude that were floating in storage on tankers these past few months have been unloading their cargoes thereby resulting in an increase in the number of available tankers thus causing a drop in tanker rates?

If so, that could mean the recent run-up in crude inventories may be coming to an end which should cause crude inventories to initially stabilize, then begin to drop in the coming weeks forcing oil prices to rise as summer approaches.

Any thoughts on this?


I commented on it in my blog.. here is the post http://marystruck.com/garden/?p=260
But I'll be glad to save you the trip.

The trucking market in the U S A is a reflection of all world wide shipping. Some shipping numbers give clues or previews of what we will experience here.



Tanker shipping and the damage to the industry of competition by dropping price due to over capacity gives both a clue to the future ability to recover (if any recovery should ever occur) from the depression we are experiencing, and a vision of the damage the same over capacity from shrinking demand is causing to our industry.



Speculation on future conditions is a major part of successful business management planning.



Quotes from this story give a picture of coming hardships. I do recommend reading the entire article but will not do a complete quote here but instead offer a link so that interested readers will honor the copy right of the original author.

The article starts out by detailing the percentage of loss in DEMAND;

By Todd Zeranski

April 3 (Bloomberg) — The cost to transport crude oil from the Caribbean on Aframax tankers fell 43 percent this week as the supply of ships available for charter exceeded demand.

Aframaxes today were hired for an average rate of Worldscale 70, down 6.7 percent from WS 75 on April 1, according to New York-based Poten & Partners, London’s Galbraith’s and Houston’s Lone Star, R.S. Platou. WS 70 is about $8,300 a day after expenses, such as fuel and port fees. That is near break- even level for shipowners.

“The Caribbean spent the whole week in decline,” E.A. Gibson Shipbrokers, based in London, said in a note to shipowners and brokers. “There is little to suppose that things will turn around in the short term.”




Note that this is a staggering drop in demand caused almost entirely by drop in petroleum use in the USA which you can also see at the NATSO web site in sales numbers from truck stops. This drop was delayed from showing up in the tanker rates by the growing use of VLCC and Aframax tankers as floating oil storage sites by speculators who seemingly have decided to stop increasing their floating holdings enough to keep the shipping demand drop hidden by using the surplus tankers as floating storage. They might have begun to realize the futility of waiting, hoping to score big on the beginning of a demand rebound.

There is no sign yet that those floating “speculative investments” are being unloaded or sold but the dropping demand now at least makes it possible to continue the holding of the tankers at a much cheaper rate floating off shore hoping to see a price rise and resulting quick gain. This rate drop might actually save some of these speculative investors from ruin even as it ruins an entire segment of the shipping industry.

Us crude and “gasoil” storage is still at record highs as weak demand and extended maintenance shut downs at refineries continue to keep refinery margins too low to justify restarting and ramping up production at poor performing refineries. The added pressure on suppliers of those massive amounts of floating speculative reserves and the dropping demand as the economy continues it’s downward spiral makes interesting spectator sport watching “will the speculators fall into debt to the cost of renting ships as storage tanks?” or will that same dropping demand destroy the viability of the shipping companies where they beg for people to lease even at a loss their tankers as floating storage.



When the dam breaks and that monster slug of excess product is driven to market, will the shippers be able to resume transportation or will they simply disappear forever from the capacity stream just when their services are needed again?



A second quote confirms this and gives a notice on European conditions as being even worse;

Demand for voyages is weak as U.S. fuel use slows and U.S. oil stockpiles rise. Total daily fuel consumption was 18.9 million barrels in the four weeks ended March 27, down 4.4 percent from a year earlier, according to the Energy Department. Oil supplies are at a 15-year high.

Rates may sink even lower as available ships wait in the region and compete for “extremely scarce” cargoes, Galbraith’s said in a note today. Aframax rates in the Mediterranean have fallen 54 percent this year.

“The supply is comfortably able to absorb inquiry levels without causing any likely firming in rates,” the broker said. “Unless the list thins out considerably, there remains the possibility that earnings could erode further.”

Re: Tanker Rates Fall

Unread postPosted: Sun 26 Apr 2009, 17:51:42
by TheDude
Found a site where you can call up rate charts with a free subscription: Capital Link Shipping | Investing In International Shipping

Here's 1 year of the Baltic Clean Tanker:

Image

Are these historic lows?

Image

48th - was there an analogous impact on tanker companies in the 80s with the crude price crash? All I've ever heard about that era and speculative storage was those anecdotes about tankers sitting offshore NYC, though. But data was much more sparse then.

Bookmarking your blog. Good reading appears to be, yes. :-D

Re: Tanker Rates Fall

Unread postPosted: Mon 27 Apr 2009, 07:48:44
by pup55
anecdotes about tankers sitting offshore NYC


There was legend years ago about a giant tanker fleet being stored in some fjord up in Norway, waiting for the day that the tanker rates got high enough to operate...

Here is a brief calculation:
Code: Select all
   1993   2009
US Total   248   408
Canada   32   78
Mexico   26   44

Tanker   190   286


In January of 93 we imported 248 million barrels of oil, of which 32 was from canada and 26 from mexico. Making the generous assumption that the north american stuff arrived by pipeline you have a net of 190 million barrels of oil per month that had to come into the country via tanker. We know, of course that a lot of the oil from Mexico arrives by tanker, but for the moment, please let me slide and make the calculation easier. Also, a lot of the US oil from the north slope has to be tankered from Seward down to the lower 48, so in actuality, the tanker demand is probably a lot higher than that.

In 2009, we imported 408 million barrels, of which 286 came from someplace that for sure had to be tankered in. So conceptually, the tankerage market for just the US grew about 60% in that time period, and that is before the first drop started going to China....

so conceptually, a third of the fleet has been constructed since 1993.....

Re: Tanker Rates Fall

Unread postPosted: Mon 27 Apr 2009, 12:12:58
by TheDude
pup55 wrote:In 2009, we imported 408 million barrels, of which 286 came from someplace that for sure had to be tankered in. So conceptually, the tankerage market for just the US grew about 60% in that time period, and that is before the first drop started going to China....

so conceptually, a third of the fleet has been constructed since 1993.....


That Ship Chartering blog I link to above points out that 144 of 146 orders for VLCCs are from builders in East Asia, too.

Had this bookmarked: US Maritime Data Statistics, including tanker calls, broken down by DWT and number, here's my graph for the latter 2002-2007:

Image

Would be interesting to set that off against Mexico/Canada production, or gross imports. Doesn't look like its on a plateau like world production.

Re: Tanker Rates Fall

Unread postPosted: Mon 27 Apr 2009, 12:50:21
by pup55
pardon me while I "muse" on this.....

At 2 million barrels per trip capacity of a VLCC
and 4 weeks to go from Saudi to China
that's 6 round trips per year.....12 million barrels....

times 146 VLCC's

1,752 million barrels per year shipping capacity
divided by 365.....

the system was, at one time, gearing up to ship an additional 4.6 million barrels of oil per day between Saudi and China (assuming none of the existing tankers were taken offline).....

So, if those little guys used about 3 million barrels last year, the market was anticipating growth up to about 8 mbpd Chinese consumption within the lifetime of those tankers.....so no wonder they were cancelled.... with the 16% contraction in demand that was reported recently....

I wonder if Saudi had that much oil. There was a lot of question even when the market was overheated as to whether they would ever be able to get up to 12...

Anyway, to the peak oilers watching this.... there is obviously a lot of question as to whether or not the system could have ever produced that much oil.....and even more question as to whether or not that much oil could get shipped with the existing tanker fleet.....

This is a really interesting topic. Interesting.

Re: Tanker Rates Fall

Unread postPosted: Mon 27 Apr 2009, 18:16:29
by TheDude
pup55 wrote:This is a really interesting topic. Interesting.


Image

Just getting started here but Heading Out had this early post on TOD: The Oil Drum | Tankers carry oil and a story.

Last year the world tanker fleet was fully committed, and rates for the largest tankers were as high as $200,000 per day last November. RS Platou reports that these rates have now fallen to around $25,000 per day and there are some 82 Very Large Crude Carriers (VLCC, ships of more than 200,000 tons deadweight) currently on order at a price of around $125 million each, with 18 new ones being launched this year. It is an average growth of some 6% per year, after years of very little change. This sensibly says that the world will likely have enough tankers to carry any anticipated growth in supply. But the drop in rate also suggests that the supply of oil is turning out to be less than the tanker owners had projected. And if the world supply is peaking, then there will likely be a growing extra supply of tankers and the rates may well stay down.

There have been suggestions that the 360,000 bd difference between what Saudi Arabia claims to have produced, and the number that is reported as being shipped is being stored in Saudi Arabia to provide an inventory against times when demand exceeds immediate production, as may well occur within the fourth quarter. May is reported to be the slackest time of the year for tankers as this is the time refineries do maintenance before the high production runs of the summer gas and fall heating oil seasons. This may well be a reason that there has been little increase in the loadings of oil from the Middle East. But the article goes on to say:


His link from that quote is long dead but here's an update: RS Platou Portal - Annual Report. Nice charts therein, especially deliveries and deletions of new tankers - wouldn't it be keen to do that with crude projects? Getting a handle on the size of the world's fleet would be quite a challenge. Wiki says 4,024 ships 10k+ DWT, but their source is the "Office of Data and Economic Analysis," which Googling reveales to be either fictional or a typo (!). Take out the quotes and you get Commerece Dept and the SEC, no hits for "tanker" at either... :?:

Re: THE Tanker [ship] Thread (merged)

Unread postPosted: Wed 10 Jan 2018, 00:57:22
by Tanada
As usual graphs and such at link below the quote. I found this story interesting if a bit over the top in its reporting style. If land bound tank storage continues to fall then sooner rather than later it will be back to 'normal operating levels' and tanker traffic will have to pick up its pace again to provide the supply the refiners need from the producers. It is also true that some of the storage in question was stored on those same idle VLCC so it artificially placed ships out of circulation until those cargoes were sold by the people storing the crude onboard those ships. The natural consequence of those 100 or so ships that were being used for medium term storage selling off the cargo and going back into circulation is axiomatically an increase in the supply of ships available for hire which naturally drives hiring costs down. You can't take any supply/demand equation and ignore a major factor like that, then act astonished at the results you get. Well I guess you can, the author of this article did, but it is a silly way to report fundamental realities of the marketplace.

OPEC’s strategy to end a worldwide crude glut is causing havoc for a vital link in the oil industry’s supply chain: the fleet of supertankers that shuttle fuel between continents.

The ships’ average earnings plunged last year by more than half to levels not seen since 2009 and far below what shipping analysts had been predicting. Now, the producer group’s extension of output cuts throughout 2018 is adding to the downturn.

“These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly-built vessels are being delivered,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a phone interview.

Oil supertankers, known in the industry as very large crude carriers, or VLCCs, can measure a quarter of a mile in length and haul about 2 million barrels of crude. Since the beginning of 2017, the Organization of Petroleum Exporting Countries and its allies have sought to reduce oil production by almost 1.8 million barrels a day, curbing exports and business for tankers on key trade routes. The group in June plans to revisit the cuts, which currently run through the end of the year.

Crude exports from OPEC’s Persian Gulf members last month dropped below 18 million barrels a day for the first time since August, tanker-tracking data compiled by Bloomberg show. In particular, observed shipments declined to China and Japan from Saudi Arabia, Iran and the United Arab Emirates.

Meanwhile, the global supertanker fleet is expected to expand by 4 percent this year, after growing 5.3 percent last year and 7.4 percent in 2016, Clarkson Research Services Ltd. estimates. Shipping rates have tumbled in recent months, a time of year when they often strengthen.

“If OPEC lifts the output cut in its revision in June, the rates would improve as more oil will be pumped to the market,” said Jakob. “But if it doesn’t then the rates would suffer the whole year.”

Earnings for the vessels slumped by 57 percent to $17,794 a day on average last year, the lowest since at least 2009, Clarkson data show. Analysts surveyed by Bloomberg had anticipated an average of $25,000 a day for 2017.

Oil prices and tanker earnings often move in opposite directions. In 2013, a year when Brent crude reached almost $120 a barrel, supertankers earned an average $18,621 a day, according to Clarkson. Two years later, amid the oil-price slump, daily returns jumped to an average $64,846.

Since June, Brent futures have soared more than 50 percent to the highest level in more than three years. They traded at $67.92 a barrel as of 1:53 p.m. in London. Earnings on a key supertanker route from the Persian Gulf to Asia plummeted 69 percent in 2017 to end the year at about $16,000 a day, well below the December seasonal average, Baltic Exchange data show.

The rate rout has affected some of the world’s largest tanker companies. Shares of Bermuda-based DHT Holdings Inc. declined to a 2017-low of $3.55 on Dec. 20, though they have risen slightly in recent days. Frontline Ltd.’s shares dropped 39 percent last year.

Fleet growth and inventory drawdowns, which reduce the amount of fuel for export, are “the dominant reason for the weak tanker market we have experienced during the last 12 months,” Robert Hvide Macleod, chief executive officer of Frontline’s management business, said by email. The OPEC cuts have been offset by an increase in trade flows elsewhere, including the Atlantic Basin and from the U.S. to Asia, he said.

Amid the market turbulence, Antwerp-based Euronav NV on Dec. 21 said it would acquire Gener8 Maritime Inc. of New York, creating an independent tanker operator with a fleet of 75 crude tankers, including 44 VLCCs. Euronav declined to comment because the transaction hasn’t been completed yet. A Gener8 Maritime spokesman didn’t respond to a request for comment.

“The crude tanker market has a double whammy: reduced OPEC exports and too many new ships,” said Burak Cetinok, head of research at Arrow Shipbroking Group in London. “We expect volatility in the rates this year but overall a challenging market.”

In addition, crude is now trading in a structure called backwardation, when near-term contracts are at a premium to later-dated ones, an indication that the market is re-balancing and the attraction of storing oil -- particularly at sea -- is diminishing.

“That frees the ships tied-up for storing oil, adding to the vessel glut,” Petromatrix’s Jakob said.

The second half of this year may provide a turning point for supertankers as demand for OPEC crude increases and fleet growth slows, according to shipping analyst Eirik Haavaldsen at investment bank Pareto Securities AS.

“The first half will be weak though, and probably weaker than the first half of 2017,” he said.


LINK

Re: THE Tanker [ship] Thread (merged)

Unread postPosted: Wed 10 Jan 2018, 17:58:41
by Subjectivist
Don’t forget those new Russian ice breaking ankers can sail non stop through a meter of sea ice to load or deliver from Aectc ports.

Re: THE Tanker [ship] Thread (merged)

Unread postPosted: Wed 10 Jan 2018, 18:31:56
by GHung
Subjectivist wrote:Don’t forget those new Russian ice breaking ankers can sail non stop through a meter of sea ice to load or deliver from Aectc ports.


And their LNG tankers can break ice. That gas may even end up in Boston, if the price is right:

US has to buy Russian natural gas as consumer prices soar

Russia will deliver liquefied natural gas (LNG) to the US, Kommersant daily reports. The reason for the deal is the sharp rise in gas prices on the east coast of the US.

An LNG tanker belonging to French energy company Engie is now shipping from the British port of Isle of Grain to an American terminal, Everett, located near Boston.

The gas being shipped is from Russia’s Yamal LNG plant, according to the newspaper. The tanker is due to arrive in the US on January 22.

As the newspaper reports, the deal was signed because of rising gas prices – to an unprecedented $6,300 per a thousand cubic meters – on the east coast of the US. Extreme weather conditions, in particular a snow storm, led to the price hike.

US sanctions against the Russian energy sector do not directly ban supplies of LNG to America from Moscow. However, Washington has repeatedly stressed it wants to oust Russia as Europe’s key gas supplier and has imposed sanctions that hinder the financing of Gazprom’s projects with Brussels.

The tanker was loaded in the British port just after Russian tanker Christophe de Margerie arrived in the UK in December with the first batch of Russian LNG.

In December, Russia opened an LNG plant in the country’s northern region of Yamal. The ice-breaking tanker was named after the former CEO of Total, Christophe de Margerie, who died in a plane crash in Russia. The tanker can carry up to 173,000 cubic meters of LNG. Russia plans to build 15 tankers of that size....

https://www.rt.com/business/415345-unit ... ssian-lng/