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Tankers: Harvey Impact a Mixed Bag

The tanker market is faced with the impact in trade flows of the latest Hurricane season’s effect. In its latest weekly report, shipbroker Intermodal said that “the impact of Hurricane Harvey, which made landfall on 25th of August in South East coastline of Texas area has been the major concern of the shipping world –and not only- during the last weeks. The phenomenon has certainly been the barometer of the MR product tanker market within the Atlantic basin and likely to affect movements in further parts of the world”.

According to Intermodal’s Stelios Kollintzas, Specialized Products, “although freight rates significantly increased on the back of the tropical storm, by Friday 1st Sept, when ports started to partly operate again, rates had leveled off but were still very satisfying. As is so often the case with market dynamics owners dedicated in the edible oil markets wait to get advantage of the developing situation”.

The shipbroker said that “it looks like the end of the summer months and the hurricane have brought a much needed awakening in the S. American veg oil business. The last weeks we have seen the September enquiries being covered and cargoes already out for October dates. As long as the Atlantic CPP market remains firm, Owners will try to push freight rates for veg oil exports from S. America upwards. There are already more and more ships ballasting north–and as a result shortening the supply of available vegetable oil candidates. The going market rate to India for 40,000MT shipments basis 1 load / 2 discharge ports is USD low 40 pmt basis 35,000mtons”.

Kollintzas added that “it looks like the long-haul MR Palm oil market is reviving and Owners have adopted a bullish position. Following a very lively August, September is following the same pace and charterers are now trying to cover their forward enquiries early. This is to say that the FOSFA MR available tonnage for September is scarce, while charterers are already looking ahead to book for October. The T/C Trip benchmark with delivery at charterers’ preferred load port and redelivery in the Med-Cont-USA is $15,000/day. However, we dare to say that this number is likely to increase a lot further if current activity is sustained, as there are already rumors for significantly higher numbers being negotiated at the time of this writing”, he noted.

Meanwhile, “the regional palm oil market has certainly sustained healthy activity with India leading the way in imported volume and China gradually increasing its demand ahead of the golden week holidays, although freight rates have so far failed to move accordingly. Surprisingly, this is against the fact that India has increased the taxes on import of crude palm oil (15% up) and refined palm oil ( 25% up) from Indonesia and Malaysia. If a call has to be made on the last quarter of the year, it would be fair to say that if current positivity on the edible oil market and the rush in the Atlantic does not cool-off, owners will be on track for a better end to the year”, Kollintzas concluded.

On a similar note on the tanker market, Intermodal said that the crude carriers market continues to display a mixed picture, with gains in some routes lifting spirits a bit though last week. In the newbuilding market, “the last week of the summer season witnessed healthy contracting, with numerous orders in both the dry bulk and tanker sector, and while the 11 firm Kamsarmaxes ordered recently are in line with the strong momentum the dry bulk market has been enjoying, Hyundai Merchant Marine’s VLCC order is more notable given that it has been more than a month and a half that we hadn’t seen an order in this size. The much weaker earnings big tankers have been witnessing in the past months have certainly affected ordering appetite among tanker owners, while the fact that second-hand prices in the sector have not corrected accordingly, shows that there is a lot of resistance and – most probably – expectations of a far better “school year” ahead, which seems to be what keeps ordering interest alive together of course with the –still relatively – low newbuilding prices. In terms of recently reported deals, S. Korean owner, Hyundai Merchant Marine, placed an order for five firm and five optional VLCCs (318,000 dwt) at DSME, in S. Korea for a price in the region of $83.5m each and delivery set in 2019”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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