DRY
Freeport Indonesia closes mine access road again after shooting
The Indonesian unit of Freeport-McMoRan Inc closed the main access road to its giant copper mine in the eastern province of Papua on Tuesday for the second time in three days after another shooting incident. A Freeport vehicle was hit by gunfire while it was heading from Tembagapura to Ridge Camp, the company said in a statement, referring to an area where Freeport workers live. (Reuters)
Dry weather stalls 2017/18 Argentine soy planting
Mostly dry weather expected next week in Argentina’s main agricultural area will delay soybean planting for the 2017/2018 season, analysts said on Monday. In Argentina, the world’s main soymeal exporter, rainfall in November has been lower than expected, causing alarm among farmers ahead of next week’s dry forecast. (Reuters)
Glencore plans to sell Australian Rolleston coal mine in H1 2018
Diversified natural resource company Glencore is expecting to select a preferred bidder and announce a binding transaction for the sale of its Rolleston coal mine in Queensland, Australia, during the first half of next year, the company said Monday.
“There continues to be strong interest from a number of parties in our Rolleston mine, but Glencore has not yet reached any form of agreement or understanding with any party,” it said.
“We welcome the reported interest from Macquarie Capital, Brookfield and Aurizon and are open to receiving a proposal from them and all other interested parties,” it added.
The mine, which is in the southern part of Queensland’s Bowen Basin, is expected to produce 17 million mt of saleable thermal coal in 2018, Glencore said.
Due to its low ash content, Glencore said that none of the thermal coal extracted at Rolleston required washing. The coal is sold either for export via the Port of Gladstone, or in the domestic market.
“The mine has a track record of strong performance throughout the commodity cycle and has approval from the Queensland and Federal Governments to extend its mine life to beyond 2040,’ the company said.
In July, Glencore agreed to acquire a 49% interest in Yancoal’s Hunter Valley Operation coal mine in New South Wales and form a joint venture following Yancoal’s acquisition of Coal & Allied from Rio Tinto.
Glencore has made a number of changes to its portfolio of Australian coal assets in the past couple of years. It sold a subsidiary that operates the Abbot Point Coal Terminal, its GRail coal haulage business, and it has begun the sale process for its Tahmoor coal mine.
Meanwhile, it has acquired full control of the Newlands and Collinsville mines. (Platts)
Southeast Asia to push up coal use, especially for power output, till 2040: IEA
Southeast Asia will propel the growth in coal consumption in the next two decades due to the fossil fuel’s easy availability and cost effectiveness, despite a strong push for renewable capacity addition, the International Energy Agency said in its World Energy Outlook 2017 released Tuesday.
“Southeast Asia, together with India and other developing economies in Asia, is the primary growth center of coal demand in the world,” the IEA said. Power plants account for three quarters of the additional coal use in the next 25 years, the IEA added.
The share of coal in the region’s power mix is expected to increase to 40% in 2040, from about 35% currently, while gas share is expected to decline to less than 30% from about 45% currently.
Over the outlook period up to 2040, coal imports are expected to decline in advanced economies like the European Union, Japan and South Korea.
Even in China, which was the largest importer 2016, coal inflows were expected to decline to about 70 million mt of coal equivalent by 2040, down from nearly 200 mtce, or about 266 million mt, in 2016, the IEA said.
“China’s administered coal industry restructuring plays a central role in coal market dynamics through the early 2020s,” IEA said, adding that various policy measures had been introduced in the country to manage domestic production and maintain a narrow price band for its coal at $80-$90/mt.
“Our outlook for coastal Chinese prices, $84/mt in 2020 and $87/mt in 2025, falls within the targeted range,” the agency said.
Fast-growing and price-sensitive economies such as Vietnam, the Philippines, Malaysia, Thailand and Pakistan would increasingly turn to the international coal market to meet their energy needs, it added.
“India is the hope of many coal-exporting companies around the world,” the IEA said, but warned that rising demand might not necessarily translate into increased imports.
Coal demand in India was expected to grow at an average rate of 3.2% per year to about 1,230 mtce in 2040, from about 575 mtce in 2016, primarily driven by economic growth, the IEA said.
Steel production was expected to more than quadruple by 2040, while cement output was expected to triple as was electricity generation, the IEA said.
As much as 370 GW of new coal-fired capacity was expected to be commissioned by 2040, of which 50 GW was already under construction, it added. However, solar power may offer stiff competition due to a plunge in costs associated with photovoltaic cells amid strong competition.
“India has set itself an ambitious target of reaching 100 GW of solar PV by 2022; this looks hard to achieve, but a faster-than-expected drop in costs would result in significant upside potential for solar PV and downside for coal,” the IEA said.
The gap between solar and coal-fired electricity production costs was narrowing, the IEA said, adding that while there was scope for further cost reductions in solar, there was not much room for further price correction in coal-fired generation.
“Solar PV could therefore disrupt the future of coal in a country that has been widely expected to be a major growth engine for global coal use for decades to come,” the IEA said.
While domestic Indian coal production was rising, imports were projected to increase to 235 mtce in 2040 from 163 mtce in 2016, with three quarters of the increase coming from coking coal, the IEA said.
India aimed to double its total coal production to about 1.5 billion mt by 2019-2020, compared with 2014 levels, but state-owned Coal India Limited has failed to meet its annual output targets the past few years.
“While coal production increases in India may have fallen short of annual production growth targets, it saw increases of 8% in 2014; 4% in 2015 and another 7% increase is estimated to have taken place in 2016,” the IEA said.
India’s coal production was expected to increase from about 400 mtce in 2016 to almost 1,000 mtce in 2040, it added.
Coal imports have continued to fall in the last two years and over the next 10 years, steam coal imports were likely to remain largely flat, the IEA said.
Meanwhile, on the supply side, Australian coal exports were expected to rise to about 425 mtce in 2040 from 360 mtce in 2016, with coking coal accounting for about half the exports, the IEA said.
Coal prices saw a steep decline from 2012 to 2016 which led several mines to cut costs and improve efficiency globally.
“Coal companies in Australia have navigated the industry crisis better than many of their peers elsewhere, rigorously cutting costs and improving productivity,” IEA noted.
The Indonesian government planned to cap coal production at 400 million mt, about 300 mtce, from 2019 and meet domestic needs first, the IEA said.
Current reserves would last only about 40 years at current mining rates, the government has said.
With Indonesian coal exports likely to drop by 2040 to about 165 mtce from about 290 mtce in 2016, other exporters had the chance to snatch market share, the IEA said.
Japan’s coal imports are expected to drop 30% from 2016 to 115 mtce in 2040 amid 60% hike in renewable capacity, it said.
South Korea was also looking to reduce its reliance on coal for power production and increase renewables and natural gas, the IEA said.
Its coal imports could drop by nearly 50% from 2016 to less than 60 mtce in 2040, it added. (Platts)
BALTIC INDEX
Last Index Published Date: 14 NOVEMBER 2017
Baltic Exchange Dry Index 1405 -50
Baltic Exchange Capesize Index 3209 -142
Baltic Exchange Panamax Index 1346 -41
Baltic Exchange Supramax Index 872 -16
Baltic Exchange Handysize Index 640 -2
TIMECHARTER
‘Anangel Seafarer ‘ 2011 179754 dwt dely China prompt 2 laden legs redel Singapore-Japan $20,000 daily – Classic Maritime – <fixed mid-last week>
‘Anangel Happiness’ 2008 177720 dwt dely China prompt 2 laden legs redel Singapore-Japan $19,000 daily – Classic Maritime – <fixed mid-last week>
‘Sirocco’ 2014 82000 dwt dely Zhuhai 13/14 Nov trip via East Australia redel India $10,250 daily – cnr
‘Krousson’ 2011 81316 dwt dely US Gulf 15 Nov trip redel River Plate $14,000 daily plus $100,000 ballast bonus – AEC
‘Four Coal’ 2014 76822 dwt dely Shanwei prompt trip via Samarinda redel Tanjing Bin $8,500 daily – World Wide Bulk – <corrects rate from 13/11>
‘Chris’ 2006 76629 dwt dely Canakkale end November trip via Black Sea redel Singapore-Japan $19,500 daily – Cofco
‘Moon Globe’ 2005 74432 dwt dely Aratu 23/27 Nov trip redel Skaw-Spain $12,500 daily plus $266,000 ballast bonus – Louis Dreyfus
‘Caroline Victory’ 2008 58713 dwt dely Canakkale prompt trip via Black Sea redel Singapore-Japan $18,350 daily – Cargill – <last week>
‘Trans Autumn’ 2012 56838 dwt dely Kwangyang prompt trip via Philippine redel China $8,500 daily – Huaya – <last week>
‘Evans’ 2009 53507 dwt dely Kohsichang prompt trip redel Chittagong intention clinker $10,000 daily – Exsquare Shipping
PERIOD
‘Darya Lok’ 2012 81874 dwt dely Xiamen prompt 4/6 months redel worldwide $11,000 daily – Solebay
COMMODITY NEWS
Oil prices fell as the prospect of further rises in U.S. output undermined ongoing OPEC-led production cuts aimed at tightening the market. Gold prices inched down, with the dollar holding steady on higher U.S. Treasury yields amid uncertainty over the outlook for tax reforms in the United States. Chinese nickel futures led gainers, building on hefty overnight gains in the London market as consumers built positions as a hedge against further price rises. Chicago soybeans edged higher with prices underpinned by bargain-buying after the market dropped to a two-week low in the previous session, although gains were limited by rains in key Brazilian growing areas. (Reuters)
CME to launch new Black Sea grain futures with Platts
CME Group will launch next month Black Sea wheat and corn futures based on Platts price benchmarks to extend its presence in a booming export region. The cash-settled contracts will begin trading on Dec. 18, subject to regulatory clearance, the exchange said on Monday. (Reuters)
TANKERS
OPEC points to larger 2018 oil supply deficit as market tightens
OPEC raised its forecast on Monday for demand for its oil in 2018 and said its deal with other producers to cut output was reducing excess oil in storage, potentially pushing the global market into a larger deficit next year. The Organization of the Petroleum Exporting Countries also said in a monthly report it had cut its estimate of 2018 supply from non-OPEC producers and said oil use would grow faster than previously thought due to a stronger-than-expected world economy. (Reuters)
Global oil demand to withstand rise of electric vehicles -IEA
Global oil demand will fall only modestly alongside the expected rise in electric vehicles over the next two decades, with consumption in petrochemicals and other transportation still growing, the International Energy Agency said on Tuesday. Oil is already facing stiff competition from ever-cheaper and more environmentally friendly energy sources as traditional fossil fuel users switch to cleaner, low-carbon alternatives. (Reuters)
Shell sells out of Woodside Petroleum for $2.7 bln
Royal Dutch Shell on Monday sold its entire stake in Australia’s largest independent oil and gas company Woodside Petroleum Ltd for $2.7 billion as it pushes ahead with its vast disposal programme. Shell, which has been slowly divesting its Woodside holding, initially said its Shell Energy Holdings Australia Limited (SEHAL) unit had struck a deal with two investment banks to sell 71.6 million Woodside shares for A$31.10 ($23.79) apiece. (Reuters)
Venezuela crude output hits 28-year low – OPEC
Oil-dependent Venezuela’s crude output dipped last month below 2 million barrels per day, its lowest level in nearly three decades, global producer group OPEC said on Monday. The output fall could not come at a worse time, with the economy in crisis and the socialist government struggling to pay its foreign debt. The government opens talks on Monday with creditors to renegotiate its debt and avert a default that would plunge its economy into deeper trouble. (Reuters)
China’s crude oil processing runs in October rise to 2nd highest on record
China’s refiners raised crude oil processing runs to near record monthly levels in October as refining margins jumped after the country’s state planner hiked prices for gasoline and diesel at the pump. Also on the rise last month, according to data released by China’s statistics bureau on Tuesday, was the country’s natural gas production – jumping 15 percent to a seven-month high as oil majors ramped up output to meet growing winter demand spurred by Beijing’s squeeze on the use of coal for heating. (Reuters)
US Gulf Coast distillates flows to Europe around 1.2 million mt for November
Distillates flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival total around 1.2 million mt, according to data Monday from cFlow, S&P Global Platts trade flow software.
It was the first time the flow has exceeded 1 million mt since the advent of Hurricane Harvey in late August.
Sources had been expecting the US to ramp up and return to full production, putting a bit of pressure on European prices.
While the arbitrage has seen sporadic moments of workability, the flow coming over was heard to be mostly system barrels, or volume that was pretty much committed.
Nevertheless, the headline figure has been dented by some volume diverting to Latin America.
Five vessels carrying distillates left over the past seven days to head to Europe, four Medium Range tankers carrying roughly 40,000 mt each and one Long Range 1 tanker carrying in the region of 60,000 mt.
Of the cargoes on water, the STI Fontvieille diverted from Lavera, France, to Contantza, Romania, in what was a relatively unusual move given the Black Sea is a regular exporter of ultra low sulfur diesel, the main product exported from the US Gulf Coast.
However, there has been a degree of tightness in the East Mediterranean, where Turkey has been tendering to buy on a regular basis, which has mopped up any excess barrels leading to nothing being currently offered on the spot market, according to one source.
Generally, freight costs mean US vessels rarely venture past the Adriatic Sea. (Platts)
Tankers: LR1 freight rates in Americas seen rising as arbitrage opens to NE Asia
An open naphtha arbitrage to Asia, combined with lack of available Long Range tanker positions outside the US Gulf, is forcing freight rates from the US Gulf Coast to the Far East up and widening spreads between Long and Medium range tankers for this route.
“I’m seeing plenty of boats carrying reformer-grade naphtha going to Asia,” a US refined products market source said.
S&P Global Platts assessed the Long Range tanker route from the US Gulf Coast to Japan/South Korea at $1.625 million lump sum on Monday, up $25,000 from Friday. This marked a spread between LR1 and MR freight for this voyage of $275,000 lump sum, up $25,000 from Friday’s spread and the largest seen in Q4 thus far.
Since Platts began assessing these routes in June 2016, spreads between the two have averaged $193,000 lump sum, with a high point of $425,000 and a low of $5,000.
“If you are loading 470,000 barrels, you’d better be able to sell all of them,” said a shipping source, adding: “you need a buyer for it, and often times people can only find someone to buy 300,000 barrels.”
A mixture of LR1s and MRs have been either fixed or placed on subjects for the USGC-Far East voyage in the past week, and all LR1s were confirmed to be carrying naphtha.
“Marginal [profit] is MR, in the money is LR,” the US refined products market source said.
Platts counted three LR1s: the SCF Alpine to Trafigura, the Grace Victoria to Vitol, and another vessel to be nominated to BP. The SCF Alpine was fixed at $1.55 million around November 7, the Grace Victoria at $1.6 million later in the week, and the third vessel at $1.625 million on Monday.
Though rates for LR1s are steadily on the rise, freight for MRs has fluctuated between $1.325 million-$1.35 million lump sum in the past week. Moreover, Exxon was reported to have an outstanding cargo for the voyage, though had not covered as of late Monday.
“There have been some inquiries for [the Far East] route, but, the reason [freight is high] is just that the Continent’s firmed up and that the ships that are in position are coming from Brazil,” said a ship broker.
According to market sources, Long Range vessels essentially arrive at a fork after unloading in Brazil, as they must ballast to a different region, which could be either the US Gulf or Europe.
“The market in the Continent is good, and the ballast [from Brazil to the USGC or Europe] is the same. They’re all European owners, so they are not tied to always coming to the US Gulf,” said another ship broker.
A shipping analyst also noted that LR1s in the Gulf had very lucrative options in other parts of the world, which contributed to rising freight.
“Anecdotally, the market has been quite strong for LR1s elsewhere, such as the Arabian Gulf and Asia,” said the analyst. “With there being relative strength elsewhere compared to here, there is incentive for owners to get out of the region,” the source added.
Rising freight in the Americas and the open arbitrage to Asia has not incentivized ship owners to take a cut in order to leave the Americas for more lucrative waters.
“The ships showing numbers are from West Africa, Brazil, or the other side of canal, so [ship owners] won’t perform the voyage unless they get more money,” said the first broker.
According to US market sources, exports of refiner-grade naphtha are sailing East to meet reformer and splitting demand.
Standard naphtha can be split to make heavy and light naphtha. Heavy naphtha can be run through a reformer to produce reformate.
“Part of the reason is that condensate prices are strong, so they’re not running as much light crude,” the US refined products market source said. “They’re running naphtha instead.”
S&P Global Platts assessed standard and heavy naphtha in the US Gulf Coast at barge gasoline minus 20 cents/gal and barge gasoline minus 19.25 cents/gal, respectively. (Platts)
US Gulf Coast seen as natural gas export hub for years to come
The US Gulf Coast is expected to be a crude oil, natural gas and LNG export hub for years to come even as supply, demand and geopolitical swings shift market dynamics, industry consultants said Monday.
At the heart of the forecast is the fact that US supplies are abundant and cheap, and billions of dollars of new infrastructure is being added to link those resources to overseas destinations, particularly in Asia, Europe, the Middle East and South America. Mexico, too, has been heavily reliant on US LNG and pipeline gas from the Gulf Coast.
During the USAEE/IAEE North American Ride the Energy Cycles Conference, government officials, analysts and investment bankers joined industry consultants to explore how shale technology is boosting the US role in global energy markets, and how the Gulf is a key focal point for those efforts.
While Saudi Arabia, Russia, Qatar and China are vying for market position, none looks likely to have the same market clout in terms of excess supply, the experts said.
“While the US may seem to be retreating geopolitically from the outside world, there has never been a hub like the US Gulf Coast. In the future, it will be even bigger,” said Edward Morse, global head of commodities research for Citigroup. “It’s hard, if not impossible, politically to disrupt that market from the hub position.”
Bolstering that expectation, S&P Global Ratings issued a report Monday that forecasts broad stability in the US oil and gas industry over the next several years. Gas prices around $3/MMBtu are a key element of that view.
There is ample natural gas supply in the US, particularly from the Northeast, where the prolific and low-cost Marcellus and Utica shale plays will continue to supply much of the growth in natural gas demand, the report said. Coal-to-gas switching, increased LNG use, and exports to Mexico are helping to drive that.
“Northeast regional differentials continue to remain below the Henry Hub price but we believe they will narrow given the significant amount of takeout capacity being built in the region over the next several years,” S&P Global Ratings said. “A lot of associated gas comes from extensive oil drilling occurring in the Permian Basin.”
The ratings agency said that companies with strong acreage positions in the Permian, which spans West Texas and southeastern New Mexico, should see the largest growth in 2018 due to its low breakeven drilling costs and double-digit returns, even with $50/b crude prices.
“Outside of the Permian, we forecast volumetric growth in the Marcellus and Utica as construction of infrastructure projects conclude and become fully operational,” the report said.
“Once Rover Pipeline is fully operational, which we expect to occur in the first half of 2018, it will improve natural gas takeaway capacity in the Northeast. We also forecast volumes to improve in the SCOOP and STACK basins. Stronger NGL prices will likely result in an increase in processing and fractionation volumes across the US.”
With such projections, investors are making big bets on the future of US oil and gas production, as well as midstream activity and, of course, exports.
For LNG, the ramp-up of exports from North America, especially from the US, will continue to grow because of increasing demand from emerging markets, said Ning Lin, an analyst with consulting firm RBAC.
“The world really needs a lot more LNG out of North America,” Lin said. “The fastest ramp-up will be in the next five to 10 years.” (Platts)
SHIPPING
DHT Shrinks Quarterly Loss
Crude oil tanker company DHT Holdings has managed to narrow its net loss in the third quarter of 2017 to USD 5 million, compared to a net loss of USD 75.7 million.
Shipping revenues for the three-month period ended September 30 reached USD 84.3 million, against shipping revenues of USD 64.8 million reported in the third quarter of 2016, mainly driven by an increase in the fleet partly offset by lower tanker rates.
The company’s very large crude carriers (VLCCs) achieved time charter equivalent earnings of USD 22,500 per day in the third quarter of 2017 of which the VLCCs on time-charter earned USD 35,600 per day and the VLCCs operating in the spot market achieved USD 17,500 per day.
During the quarter the company extended time-charters for three of its VLCCs to oil majors. The vessels DHT Amazon, DHT Europe and BW Peony have been extended for one year commencing during the October 2017 to January 2018 period. The time-charters have been extended with fixed base rates that are above DHT’s cash break even levels.
For the first nine months of 2017, the company’s net income stood at USD 14.1 million, compared to a net loss of USD 8.5 million witnessed in the same period a year earlier.
DHT Holdings’ shipping revenues were USD 262.8 million for the nine-month period of 2017, down from USD 271.1 million of shipping revenues seen in the same period of 2016.
For the first nine months of 2017 the company’s VLCCs achieved time charter equivalent earnings of USD 29,100 per day of which the company’s VLCCs on time-charter earned USD 37,100 per day and the VLCCs operating in the spot market achieved USD 25,600 per day.
DHT has a fleet of 30 VLCCs, 26 in the water and four under construction scheduled for delivery in 2018, as well as two Aframaxes. (World Maritime News)
Stena Bulk Reshuffles Its Business Activities
Swedish tanker shipping company Stena Bulk is reorganising its business activities into three business areas, including Crude & Fuel, Products & Chemicals and LNG.
In relation to the reorganization move, the company has appointed two new managing directors, namely, Mats Karlsson (Crude & Fuel) and Johnny Schmolker (Products & Chemicals). At the same time, Stena Bulk’s business activities previously conducted under the name of Stena Weco are being coordinated and incorporated into the company.
Furthermore, the company said that it will open a new office in Copenhagen, located near the Port of Tuborg, in the next few days. As a result, the company will leave its office in Rungsted, which until now has been used by Stena Weco.
Stena Bulk will continue to have regional offices in Gothenburg, Houston, Singapore, Shanghai and Dubai.
“This is a natural transition from the old structure to the new one where we now have total control over our business involving product and chemicals transportation in the MR segment. This and other adjustments will result in a clearer structure as regards our business and organisation,” Erik Hånell, President and CEO, Stena Bulk, said.
The reorganisation comes on the back of an agreement which Stena Bulk signed in March 2017 to acquire the remaining 50% of the shares in Stena Weco from its partner WECO Shipping.
Stena Weco has been incorporated into, and is wholly-owned by, Stena Bulk. Together with Stena Weco’s fleet of 65 tankers, Stena Bulk operates around 100 tankers. A third of these are owned and two-thirds are chartered. (World Maritime News)
Tanker Earnings to Remain Low in 2018 amid Oversupply
The recovery of the tanker market forecast to start next year and give the much-needed boost to company earnings seems to be far-off due to the lingering effect of tonnage oversupply.
According to Fitch Ratings, a glut of new vessel deliveries and limited scrapping of older ships means the global tanker market will remain oversupplied in the near term, keeping freight rates low and shipping company credit metrics under pressure in 2018.
The rating agency expects capacity to have increased by 5%-6% by end-2017 from a year earlier.
“We forecast capacity to rise a further 4% in 2018. This reflects orders placed in 2015 when tanker rates were high, with a large share of orders coming from Greece and China,” Fitch Ratings said.
Vessel scrapping has increased slightly, helped by higher steel prices. But only five very large crude carrier (VLCC) class tankers were scrapped in the first seven months of this year, while 36 new VLCCs were delivered in roughly the same period.
As pointed out, demand growth will probably trough in 2017 due to high global oil inventories and OPEC production cuts.
“We expect rising global oil consumption, higher US exports and gradually moderating oil inventories to drive a moderate increase in tanker demand in 2018. Demand could, therefore, rise by about 4%, potentially matching supply growth,” the agency added.
This should halt the market’s deterioration, but tanker rates are unlikely to receive a significant boost without further vessel scrappage or slower capacity growth, Fitch explained.
As a consequence, Fitch expects tanker rates to remain at current low levels throughout 2018 though they should avoid the sharp falls of the last two years. Rates for Suezmax vessels dropped by 39% in the first 10 months of 2017 following a 52% decline in 2016.
“This will keep credit metrics at shipping companies under pressure in the year ahead, although liquidity risks are limited due to generally healthy cash positions that are further enhanced by credit facilities. Companies with a large share of long-term contracts, such as Soechi and Sovcomflot, should be able to maintain relatively healthy operating profits, while those with few long-term contracts are likely to break even at best,” the agency concluded. (World Maritime News)
Odfjell Hires Four Chemical Tanker Newbuilds, Forms Tanker Pool with Sinochem
Norwegian shipping and tank terminal company Odfjell SE has signed a framework agreement with Sinochem Shipping Singapore whereby Odfjell will take four newbuilding 40,900 dwt chemical tankers on long-term bareboat charters.
The bareboat charters include purchase options at the end of the charter period.
The four ships are part of a total newbuilding order of eight chemical tankers.
Sinochem will continue to own four vessels, which together with the four bareboat vessels will form a pool of eight 40,900 dwt chemical tankers. The pool will be managed by Odfjell SE and the vessels will trade as part of the Odfjell Tankers fleet.
The series of newbuildings are built at Hantong Wing Shipyard in China, with 30 stainless steel tanks capable of handling specialty products and with a proven energy efficiency. Seven vessels from the batch were delivered in 2016 and 2017, with the 8th newbuilding expected for delivery in December 2017.
The eight vessels will join Odfjell’s fleet over the course of the coming months and will replace existing tonnage which is currently on charter to Odfjell from other owners.
Odfjell said that the replacement of existing chartered-in vessels will have a positive impact on the company’s earnings.
“With this structure, we will replace a large part of our maturing chartered-in fleet with more modern and sophisticated tonnage, and in a highly capital efficient way. We are also very pleased with the new relationship with Sinochem and with the trust they place upon us as managers of the pool”, said Kristian Mørch, CEO of Odfjell.
“We are excited to embark on this new journey with Odfjell SE which is both a recognized industry pioneer and market leader. The high-quality, sophisticated and flexible nature of our chemical tankers which are, proudly “Built-in-China”, will be a natural fit,” said Zhang Xin, CEO of Sinochem Shipping.
The transaction is subject to satisfactory completion of competition law assessment and customary closing conditions.
As the challenging market for chemical tankers persisted, Norwegian shipping and tank terminal company Odfjell widened its net loss to USD 11 million in the third quarter of this year from a loss of USD 5 million seen a quarter earlier.
The results were also impacted by the market for terminals which was under pressure from falling forward prices of oil/products. (World Maritime News)
S&P
VesselsValue: US Firms Buy Most Auction/Bank Sale Ships in 2017
2017 has seen US owners top the list of buyers of distressed tonnage, snapping up vessels sold at bank sales and at auction deals, VesselsValue said.
Asset values reached a 25-year low for bulkers, containers and offshore vessel types in 2016, with a spike in the number of bankruptcies and vessel seizures by banks. US owners have been buying these vessels, spending USD 624.1 million on 52 distressed vessels so far.
This comes in at just under double what Greece has spent, totaling USD 385.3 million. The next country on the list of top buyers is South Korea, having bought a total of 20 ships for USD 228 million.
Top three US companies which have purchased auction/bank sale vessels in 2017 include JP Morgan Global Maritime, Eagle Bulk Shipping and Navios Maritime Partners LP.
In 2016, US companies did not buy any vessels at bank sales or at auction, showing a marked shift in behavior, as explained by VesselsValue.
What is more, the type of vessels companies are buying is incredibly targeted. Specifically, companies have been only purchasing bulkers, containerships and offshore vessels. These asset types hit 25-year historical lows during 2016, with these values now rebounding.
Many in the markets are confident that continued scrapping and a reduction in ordering will balance out supply and demand, bringing asset values back in line. Savvy investors have been getting involved in the last 12 months in order to capitalize on the asset value increase, according to VV. (World Maritime News)