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Freight rates in the tanker market remain healthy

Despite ongoing volatility stemming from seasonality and market shifts, freight rates in the tanker market remain healthy, instilling optimism among tanker owners. This positive outlook is bolstered by underlying market fundamentals that suggest a bullish trend extending beyond the first few months of 2024. After a record-breaking streak of 38 consecutive positive days, the Baltic Dirty Tanker Index (BDTI) has seen a decline for 24 of the last 27 days, falling to 1,129 points. This marks a 24% decrease from the peak of 1,487 points reached on 1st November 2023, the highest level since 29th March 2023. The Baltic Clean Tanker Index (BCTI) has again climbed to over 850 points (858), mirroring the levels observed in September 2023 after hovering around 750-800 points for the past two months.

The influx of Russian diesel into Brazil remains uninterrupted, and projections indicate that volumes will maintain a robust presence in the early months of 2024. Brazilian importers have already secured contracts for Russian diesel barrels scheduled for delivery in January. In November, Brazil imported a substantial 10.5 million barrels of diesel products, and the trend continues with 2.2 million barrels imported thus far in December. During November, Russia held the position of the primary country of origin for diesel imports into Brazil, contributing a noteworthy 7.7 million barrels to the total for that month. In December, this trend continues with Russia supplying 1.6 million barrels so far.

India's voracious demand for Russian crude has recently tapered off due to an upsurge in Middle Eastern oil flows, widespread refinery maintenance activities, and heightened scrutiny of vessels transporting Russian oil. However, it is anticipated that these inflows will rebound in the coming months, solidifying Russia's position as the largest non-OPEC exporter and the primary crude oil supplier to India in the foreseeable future. Despite reaching a peak of 2.1 million b/d in June and maintaining levels as high as 1.69 million b/d in September, imports of Russian crude by Indian refiners have displayed a declining trend in recent months. Russia continues to be India's foremost crude oil provider, constituting approximately 33% of total crude imports, equivalent to 1.51 million b/d, in October, and 35% of total crude imports, around 1.55 million b/d, in November. While some state-owned refiners are expeditiously fulfilling term commitments with Middle Eastern suppliers, the lifting of sanctions on Venezuela has sparked the interest of private Indian refiners to resume purchases from the South American supplier. Nonetheless, with crude prices dipping below the $80/b psychological threshold and OPEC+ production cuts supporting prices, India could see a resurgence in Russian crude imports in the coming months.

The recent spate of attacks on commercial ships in the Red Sea, a critical oil trade chokepoint, has heightened maritime security concerns and could lead to further increases in already-elevated regional insurance costs. These attacks, carried out by Yemen's Houthi rebels, have targeted a variety of vessels, including car carriers, tankers, and dry bulkers, regardless of the vessels’ nationality. In response, navies and coast guards have issued advisories urging increased vigilance, and the United Kingdom's Maritime Trade Operations (UKMTO) has been issuing regular alerts about the potential for drone attacks. If these attacks persist or expand, insurance premiums for ships sailing through the Red Sea could rise significantly, particularly for vessels linked to vulnerable nationalities. Charterers in North Asia and Singapore have estimated that the additional war risk premium for a single Persian Gulf-North Asia voyage on a LR2 tanker could range from $5,000 to $60,000 for every seven days. Charterers typically pay for seven or fourteen days of additional war risk insurance, depending on the specific agreement. Additionally, there is an incremental charge for every 12-24 hours above this duration.

Sale and Purchase:

Capesize S&P activity was strong during the past week, having to report 5 sales. The “Iron Miracle” - 181K/2011 Tsuneishi Cebu (Electronic M/E) was sold for low USD 27 mills to clients of Costamare basis delivery Q1 2024. EGPN acquired 3 Capesizes, the “Mineral Brugge”- 175K/2011 New Times, the “Mineral Destelbergen” - 175K/2010 New Times and the “Mineral Temse” - 175K/2010 New Times for USD 62 mills enbloc. Moving down the sizes, the Scrubber fitted Post- Panamax “Double Miracle” - 95K/2014 Imabari was sold for USD 24 mills to Greek buyers. Furthermore, the Kamsarmax “Peak Dawn” - 82K/2013 Tsuneishi Zhoushan sold for excess USD 23 mills to Chinese buyers, while Greek buyers acquired the Panamax “King Coal” - 76K/2010 Oshima for USD 15.75 mills. On the Ultramax sector, the “Porto Leone” - 64K/2014 Cosco Zhoushan (Electronic M/E) changed hands for USD 21.5 mills. Last but not least, the Handysize “Global Hero” - 34K/2015 Hakodate (Electronic M/E) found new owners for mid USD 17 mills, while the “Adventure”- 34K/2011 Samjin was sold for USD 11.4 mills to Vietnamese buyers.

It was an active week for VLCC sector, as clients of Bahri acquired the Scrubber fitted “Ninawa” - 321K/2019 Samsung and the Scrubber fitted “Diyala” - 321K/2019 Samsung for USD 114 mills each. Furthermore, on the same sector, Greek buyers acquired the “Athenian Freedom” - 300K/2013 HMD (Electronic M/E) for USD 73.5 mills. On the MR2 sector, the Scrubber fitted “Nord Sustainable”- 50K/2015 STX (Electronic M/E) and the Scrubber fitted “Nord Supreme” - 50K/2015 STX (Electronic M/E) were sold for USD 39 mills each to Greek buyers.

Xclusiv Shipbrokers Inc.