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Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
WEEK 17 – 27 APRIL 2012 ISSUE 17 – 2012
Mind the Gap China fills its Iranian crude shortfall
By John M. Kulukundis
According to the semi‐official Iranian Mehr news agency this morning, an Iranian oil official has denied that China has cut imports of crude from their country in 2012. This, despite the release of Chinese Government Customs Department data to the contrary.
The Chinese Government Customs Department data this week showed China ‐ until recently Iran's top customer ‐ halved its Iranian crude imports in March compared with the same month in 2011 though this was strenuously denied this morning; "Iranian crude exports to Chinese refineries have not decreased at all in the current year," the head of international affairs at the National Iranian Oil Company (NIOC), Mohsen Ghamsari, told Mehr.
As China jostles to fill the void left by an Iranian crude supply that Iran believes they are still supplying to China, it has lead to some changes in tanker trades and if the embargo continues, will lead to more. A more in‐depth analysis of the Chinese Government Customs Department data reveals that while China’s imports of Iranian crude have reportedly
2012 2011
VLCC TCE 280k AG-USG + CBS-SPORE
MTD Average $42,900/Day
Month y/y +91%
S’MAX TCE 130k WAF-USAC
MTD Average $12,100/Day
Month y/y -5%
A’MAX TCE 70k CBS-USG
MTD Average $6,700/Day
Month y/y -22%
P’MAX TCE 50k CBS-USAC
MTD Average $13,300/Day
Month y/y +19%
MR TCE 38k CBS-USAC
MTD Average $11,400/Day
Month y/y -12%
Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
dropped by 2,153,000 tons in the first quarter of 2012 as compared to the same period in 2011 (33%), overall China’s total crude imports Q1 2012 versus Q1 2011 have risen by 7,181,000 tons or 11.32%.
Africa – Up and Down As illustrated in the graph, Angola has stepped up to help fill the void, upping their exports to China by 18% to 9,526,000 tons. Gabon (+67%), Algeria (+44%) and Congo (+0.2) were also up. These increases were offset by a larger number of percentage decreases from other African nations in Q1 2012, though it should be noted that these were by and large due to internal issues in the exporting nations rather than issues with China’s thirst for crude oil. Libya (‐3%), Mauritania (‐24%), Equatorial Guinea (‐39%), Sudan (‐43%), Cameroon (‐53%) and Nigeria (‐56%). Overall China’s imports from Africa fell Q1 2012 over Q1 2011 by a modest 475,000 tons.
The Arabian Gulf – Topping off As Iranian Crude becomes persona‐non‐grata in China, other Gulf States have stepped in and increased their supply Q1 2012 over Q1 2011. Leading the way was Kuwait, increasing their quarterly exports by 1,174,000 tons, up 58% over Q1 2011. Following Kuwait’s increase were Yemen (+44%), Iraq (+37%), Quatar (+32%), Saudi Arabia (+14%), Oman (+9%) and the UAE with a 6% increase in exports to China. Overall China’s imports from the Arabian Gulf including Iran grew by 2,829,000 tons Q1 2012 over Q1 2011.
US Crude Stocks (EIA)
373.0 Mbbls Week y/y
+2.7%
US Gasoline Demand (EIA)
8.496 Mb/d Week y/y -7.1%
2012 2011
Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
Americas – Up, up and away Columbia’s crude exports to China were up in Q1 2012 over Q1 2011 by 134%; while small compared to Venezuela, Columbian exports increased by 400,000 tons. Columbia was joined in increasing exports by Argentina (+98%), Venezuela (+56%, or 1,773,000 tons), Ecuador (+13%) and Mexico (+9%). Decreasing Americas exporters to China were Brazil (‐25%) and Canada (‐73%). Overall China’s imports from the Americas grew by 1,710,000 tons Q1 2012 over Q1 2011.
Asia and Oceania – Malaysia and Indonesia slip Thailand’s crude exports to China ramped up in the first three months of 2012 over 2011, showing growth of 85%. Australia also increased China exports with an increase of 37% and Vietnam grew by 5%. Offsetting these growth nations were Indonesia and Malaysia, whose exports to China fell 36% and 47% respectively. Over all, China’s imports from the Asia and Oceania fell by 69,000 tons Q1 2012 over Q1 2011.
Piping it in – Russia sends more down the pipe In Q1 2012 Russia increased crude exports to China by 3,219,000 tons over the same period in 2011, up a very strong 82%. Mongolia was also up 58%, though this on the back of a small 39,000 ton increase. Kazakhstan’s exports to China fell by 21%, but they still managed to export 2,343,000 tons to China in Q1 2012, 606,000 tons less than the same period in 2011. China’s imports from the Russia, Mongolia and Kazakhstan grew 2,653,000 tons Q1 2012 over Q1 2011.
While China appears to have sourced satisfactory non Iranian supply for Q1, it must be bourn in mind that they are not alone in having to replace Iranian barrels. As the Iran sanctions begin to bite, the scramble for alternative sources of crude by numerous nations from South Korea to South Africa will result in more inventive, esoteric and creative crude tanker chartering. This may well serve to scatter the tanker fleet to far flung and unusual trades, hopefully increasing ton miles and rates with it.
VLCC Projected Deliveries/Removals
3643
12
‐17 ‐17‐13 ‐12
2012 2013 2014 2015
Suezmax Projected Deliveries/Removals
32
39
15
‐11‐9 ‐6 ‐7
2012 2013 2014 2015
Aframax Projected Deliveries/Removals
29 32
18
6
‐18‐24 ‐24 ‐22
2012 2013 2014 2015
Panamax Projected Deliveries/Removals
17 20
9
‐11
‐16
‐5 ‐4
2012 2013 2014 2015
MR Projected Deliveries/Removals
67
82
22
3
‐20 ‐20‐10
‐4
2012 2013 2014 2015
Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
Spot Rates WS TCE WS TCE
VLCC WEEK 16 WEEK 17
AG>USG 280 kMT 38.5 $7,600 40.0 $9,100
AG>SPORE 260 kMT 52.5 $22,500 64.0 $38,900
AG>JPN 260 kMT 52.5 $24,400 64.0 $42,000
WAFR>USG 260 kMT 60.0 $31,300 62.5 $34,300
WAFR>CHINA 260 kMT 55.0 $24,300 62.5 $34,400
SUEZMAX
WAFR>USAC 130 kMT 65.0 $11,100 67.5 $12,500
B.SEA>MED 135 kMT 62.5 $4,400 65.0 $6,400
CBS>USG 135 kMT 70.0 $11,700 70.0 $11,300
AFRAMAX
N.SEA>UKC 80 kMT 95.0 $17,100 95.0 $16,800
CBS>USG 70 kMT 97.5 $7,400 105.0 $10,100
TRK>MED 80 kMT 92.5 $12,600 97.5 $15,900
PANAMAX
CBS>USAC 50 kMT 130.0 $13,800 140.0 $17,100
CONT>TA 55 kMT 127.5 $15,300 140.0 $18,800
CPP
CONT>TA 37 kMT 135.0 $7,700 132.5 $6,900
CBS>USAC 38 kMT 140.0 $10,000 130.0 $8,200
USG>TA 38 kMT 77.5 70.0
SPOR>JPN 30 kMT 128.0 $3,000 129.0 $3,600
AG>JPN 75 kMT 95.0 $12,000 94.0 $11,800
AG>JPN 55 kMT 122.0 $12,500 125.0 $13,700
Time Charter Rates $/day (theoretical)
1 Year 3 Years
VLCC $21,250 $26,000
Suezmax $16,250 $19,250
Aframax $13,750 $16,250
Panamax $13,500 $14,750
MR $14,000 $14,750
THE TANKER MARKETS
VLCC It has been an interesting period in the VLCC market as rates continued along their recent roller coaster ride with eastbound levels fluctuating almost twenty points over the past two weeks. At the start of the week it seemed as if the market was poised for further softening as little fresh activity led to eastbound rates initially showing a slight drop. However that trend was short lived and with some 44 fixtures over the past 3 days Owners confidence was re‐affirmed, their resistance grew and eastbound rates increased almost 15%. The sheer volume of activity was the main factor for the rise in levels and it is not surprising the market is taking a breather following all the action. However as charterers once again look at
Projected OECD Oil Demand
44.0
45.0
46.0
47.0
48.0
OPEC OECD IEA OECD EIA OECD
Projected World Oil Demand
83.0
85.0
87.0
89.0
91.0
93.0
OPEC World IEA World EIA World
130+kMT fixtures, YTD y/y Percentage Change (AG, WAFR & CBS/USG liftings)
Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
the position list they point to sufficient tonnage to cover demand and the market seems to be moving back towards a stand off. One of the main talking points heard is the effect of the Nova pool on the market, which when put together with the other larger pool, Tankers International and the independent owner Frontline, accounts for over 23% of the VLCC fleet. The ability of these owners to limit the actual availability of their fleets has added further uncertainty to many position lists. This uncertainty is one of the factors adding to the volatility of the market. As mentioned above it was an active week with a total of 55 fixtures reported, 43 emanating from the Middle East and 12 from the Atlantic Basin. The former was led by eastbound business which accounted for 40 fixtures with rates starting the week in the low ws50s, initially dropping closer to ws50, before the rush of inquiry ultimately pushed rates into the low ws60s with a high of ws65 paid for a voyage to China. At week’s end the market was again entering a stand‐off with activity slowing although upward pressure does remain for now. Westbound rates were much less volatile due the lack of overall activity; rates held steady, hovering around the ws39‐40 level. Looking towards next week we certainly expect a quieter period as we have now seen 66 fixtures concluded for May, bringing us just about to the half way point. The position list still shows some 15 units load ready through the middle of the month many of which will hang over into the second half. The upward momentum remains for now and it will take a few days of quiet to ease any pressure. That being said we expect rates to settle at current levels as we move into next week. The Atlantic Basin was also more active this week with North Sea and Caribbean business picking up activity accounting for 7 of the 12 fixtures in the region. Although with the overall inactivity over the past two weeks the list of natural players had built up to a more than ample list of avails and the Caribbean to Singapore rates adjusted to the $4.6 million level, $300k less than the last from the USG and $600k less than the last from the Caribbean. In addition to the recent inactivity we are also seeing a higher than usual number of VLCC’s discharging in the USG in early May putting added downward pressure on rates. West Africa did see some further balast units head this way, but that was limited by the stronger AG market. Suezmax The Atlantic Suezmax market saw a modest improvement this week on the back of a rebound in fresh inquiry and strengthening VLCC rates for West Africa liftings. Rates on the WAFR‐USAC benchmark route gained 2.5 points to conclude at ws67.5. Despite the greater levels of activity, sufficient supply remains and, failing a further gain in inquiry during the week ahead, only modest further gains are expected to materialize. Aframax The Caribbean Aframax was more active at the start of the week, prompting fresh rate gains. The CBS‐USG benchmark route gained 12.5 points to reach ws110 by mid‐week. However, as the lack of a more constrained list of available units became apparent, charterers succeeded at achieving ws105 on a repeated basis thereafter, thus settling rates at that level. The potential remains for rates to post further modest losses at the start of the week ahead as available tonnage builds, which should see
0
10
20
30
40
50
60
70
J F M A M J J A S O N D
Mbbls 130+ kMT Fixtures AG/West
2011 2012
0
25
50
75
100
125
150
175
200
225
J F M A M J J A S O N D
Mbbls 130+ kMT Fixtures AG/East
2011 2012
0
15
30
45
60
75
J F M A M J J A S O N D
Mbbls 130+ kMT Fixtures WAF/West
2011 2012
0
10
20
30
40
50
J F M A M J J A S O N D
Mbbls 130+ kMT Fixtures WAF/East
2011 2012
Whilst every care has been taken in the production of this study, no liability can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. All information is supplied in good faith and Charles R. Weber Company, Inc. accepts no responsibility for any and all errors
and omissions contained within this study.
rates ease towards the ws100 level. Panamax The Caribbean Panamax market was firmer this week on the back of stronger activity. Rates on the CBS‐USAC route gained 10 points to conclude at ws140. Rates remain firm despite a quieter conclusion to the week as available tonnage is limited; sustained activity during the week ahead could see further gains accordingly. CPP The Caribbean MR market remained under negative pressure again this week given weak demand against rising levels of tonnage. Rates on the CBS‐USAC route declined 10 points to conclude at ws130 whilst the USG‐TA route lost 7.5 points to conclude at ws70. With some 15 units projected to be available at the USG area at the start of the week ahead, downward pressure is expected to remain. The European market saw sustained activity again this week, but with sufficient availability – and owners ballasting units coming free off the USAC towards Europe where at least demand fundamentals are stronger – rates remained under negative pressure. The Cont‐TA benchmark route eased 2.5 points to conclude at ws132.5. A rebound in rates now remains dependent upon a pickup in ex‐USG activity to absorb tonnage and encourage owners to ballast freeing units there. At present rates, triangulated Cont‐TA + USG‐TA triangulated trading would offer ~$8,300/day (versus $6,900/day on a Cont‐TA round voyage), but when accounting for days lost waiting for cargoes such trading does not make sense. REPORTED TANKER SALES
“Taiyoh III” 95,666/97 –IMABARI – DH ‐Sold for $9.5m to undisclosed interests. “Agistri” 9,304/92 – Higaki – DB ‐Sold for $2.0m to undisclosed interests. “Spring Mistral” 3,818/09 – Tuzla – DH ‐Sold for $9.4m to undisclosed South Korean interests.
REPORTED TANKER DEMOLITION SALES There are no reported demolition sales for week 17.
$390
$410
$430
$450
$470
$490
$510
$530
$550
$570
16 20 24 28 32 36 40 44 48 52 4 8 12 16
2011/2012 weeks
TANKER DEMOLITION VALUES, $/LDT
Bangladesh China India Pakistan
FOR THE LATEST MARKET DATA AND NEWS GO TO: WWW.CRWEBER.COM
George P. Los, Senior Market Analyst
Charles R. Weber Research HH
Charles R. Weber Company, Inc. Greenwich Office Park One,
Greenwich, CT 06831 Tel: +1 203 629‐2300 Fax: +1 203 629‐9103
