Thursday, December 18, 2008
Imarex Brief 19th December 2008
Tankers
Crude
VLCC Ag/East: ws 80 ($65 k/day) touch softer on good activity
Suezmax Wafr/Usac: ws 127 ($48/day) softer
Turkish Straits delays: 2n / 2s steady
A very active day yesterday, yet rates still slid two points as ample tonnage on hand absorbed the
demand surge without difficulty. December loaders have reached the 106 count, which is not
bad…though we would have hoped that better rates would have come with this number. Fixtures
for Jan loaders is now at 14. Suezmaxes are coming off and will therefore be unable to provide
support to the V market. With the Lavera strike over, more regional tonnage is being freed into
the market.
OPEC announces a record output cut, crude prices fall further, tanker rates come off a
touch…and…FRO moves up 6% on the day. What a business! (see comments at bottom from
Omar Nokta).
Crude FFAs are quiet. TD3 Jan and Feb remain flat at 50 and 48.
Clean
37k Cont/Usac: ws 185 ($17.5k/day) 10 points higher
38k Caribs/Usac: ws 170 ($15k/day) same
55kt Ag/East: ws 147.5 ($21k/day) steady slide continues
Cont/ta hit the 185 level though Caribs/Usac remains flat. Usg/Europe ULSD cgos continue to
keep ships occupied, though the fixing pace is reported to have slowed a touch. While MRs in
the East are holding their levels for the time being, LR1s and LR2s continue to lose points.
Clean FFAs have been quiet as well. TC2 Q1 trades up 2 points to 131 while TC4 Q2 trades up
5 points to 121.
Dry Bulk
BDI 829 down 7
BCI 1476 down 39
BPI 543 up 29
BSI 464 down 12
BHSI 297 down 2
The Capes have lost their momentum though Panamaxes are still gaining ground. There is a fair
amount of uncertainty in the market, as recent rate increases must be weighed against a fairly
bleak macro picture.
Danish dry bulk operator Atlas has filed for bankruptcy. They are reported to control about 40
vessels, primarily handies with a few Panamaxes.
Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Dec 760 660 -100
BDI Q1 1400 1300 -100
BDI Q2 1725 1625 -100
CS4 Q1 $14,219 $14,250 +$31
CS4 Cal 09 $18,891 $18,500 -$391
PM4 Q1 $9,350 $9,350 -$0
PM4 Cal 09 $12,323 $12,450 +$127
SM6 Q1 $8,188 $8,000 -$188
SM6 Cal09 $9,969 $9,850 -$119
Thin volumes with minimal price movements on the Capes and Panamaxes. With the recent run
up in equity prices, there is a fair amount of mixed sentiment in the sector.
Equities
In ratings news…
- Natasha Boyden maintains a BUY on GMR after the ATB merger, though she lowers her price
target to $15 (from $19). “In our opinion, the merger of GMR and ATB creates a stronger, more
diversified oil tanker company with solid long-term charter coverage and a high dividend
payout.”
- Anders Rosenlund maintains a SELL on FRO ($22), citing OPEC and cuts and the potential for
flattening of the oil curve.
- Henrik With maintains a BUY on FRO with price target under revision. He points out that
FRO is in no rush to obtain financing and can wait until credit markets improve.
- Henrik With maintains a BUY on GOGL with price target under revision. “Although a share
issue cannot be discounted, we believe Golden Ocean will avoid this due to its operational cash
flow and potential for capex alterations.”
-George Pickral has downgraded Kirby (KEX) to EQUAL WEIGHT (from overweight) and
reduces target to $25 (from $47).
Tanker comments from Captain of Industry finalist Omar Nokta of Dahlman Rose:
“Significantly lower output should reduce long-haul VLCC demand and lead to much lower spot
rates during the first six months of 2009. According to OPEC guidance, which is incomplete,
Arabian Gulf output is expected to fall to 19.0 million bpd compared to 20.9 million bpd in
November and 22.2 million bpd during the summer peak. This equates to 33 fewer VLCC
loadings per month compared to November against an average increase of 12 VLCCs available
on a monthly basis during the first half of 2009.”
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