Download McQuilling Services 2015 Offshore Floating Systems Snapshot for a quick look at the age profile of the offshore floating fleet, size distribution, major deployment locations as well as newbuildings under construction and vessels undergoing conversion.
Marine transportation demand for crude tankers usually finds support in the final three months of the year as refiners complete maintenance in-time for winter grade fuel requirements. In turn, the supply/demand balance tilts in the owners’ favor, creating a seasonal opportunity to push rates higher until the tide reverses once again at the end of Q1. In this year’s fourth quarter, there is an additional element that is working in the owners’ corner – low bunker costs. The combination of seasonally higher freight revenues and fundamentally pressured fuel costs is creating a perfect storm, of the beneficial kind, in the short-term for tanker owners.
Global tanker supply is the one of the key factors that influences the spot market. Freight rates have exhibited weakness in recent years due to an oversupply of tonnage relative to demand, specifically for the larger dirty tankers and MRs. However, improved economic growth led by advanced economies and energy demand stimulated from low oil prices, has helped to absorb excess tanker supply. In our recently published 2015 Mid-Year Tanker Market Outlook, we examined tanker supply by looking at this year’s orderbook as well as the current delivery/exit profiles for each of the eight vessel classes.
As a supplement to this year's 2015 Mid-Year Tanker Market Outlook, we've developed an "Outlook Scorecard," which provides a snapshot of previous market behavior as well an updated forecast for 2015. The one-page format makes it a perfect desk reference that can be used throughout the rest of the year.
The term “Golden Cross” is used by financial investors to interpret a point in time whereby a shorter-term moving average crosses above a longer-term average. There is no specific definition on which averages to use. A common example would be the 50-day moving average of a stock price crossing over the 200-day moving average. When the cross-over occurs, a bullish technical signal is formed which may foreshadow a rise in the value of the stock’s price. The science is not perfect; however, and head-fakes often times disrupt the theoretical value of this phenomenon. In relation to the tanker markets, we distance ourselves somewhat from the traditional definition of a Golden Cross in that we do not use short-term and long-term moving average cross-overs as our defining variables. Instead, we utilize short and long-term time charter rates and more specifically, the 1-YR and 3-YR rates to complete the cross-over. Observing historical data, we note that when the 1-YR time charter rate is greater than the 3-YR rate, the earnings environment, measured by the spot market TCEs, is firm.
Suezmax cargoes originating in the Caribbean (Colombia, Venezuela) with discharge in the Far East are examples of candidates for transiting the canal; however, key considerations including loadable quantity restrictions and Panama Canal costs will likely offset the benefit from the shortening of distances using current East-bound routing options for these trades. In this note, we evaluate the voyage economics pertaining to these trades for the year 2016. The basis of our analysis will be the calculation of the cost per barrel for loadings transiting through the canal compared to those routing through the open-seas.
The number of first quarter global VLCC fixtures has been increasing for more than five years and 2015 is no exception. Our proprietary fixture data showed approximately 542 vessels (530 in 1Q 2014) were chartered in the first three months of the year, 63% of which originated from the Arabian Gulf. West Africa continues to be a region of focus as light sweet crude that was once headed to the US is finding its way to China and India more frequently. Fixtures from West Africa to China are up roughly 18% year-on-year, while fixtures to India totaled nearly 70. DOWNLOAD THE PDF TO CONTINUE READING
As a supplement to this year's 2015-2019 Tanker Market Outlook, we've developed an "Outlook Scorecard," which provides a snapshot of previous market behavior as well as 2015 forecasts. The one-page format makes it a perfect desk reference that can be used throughout the year.
McQuilling Services has monitored the floating storage case since July. This note is the final chapter of the three part series, “Not all Contangos are Created Equal.” As 2014 came to a close, the Brent contango began to steepen and Brent future premiums became wide enough to hire VLCCs to store crude. January was an active month for one-year VLCC time charters as traders piled into the storage trade.
In our 2014 Industry Note No. 22 – “Bigger is Better,” we inferred from our Sharpe Ratio analysis that VLCC and Suezmax tankers may offer investors a more attractive risk-adjusted return in the long-term. This thesis was further tested over the last month as we concluded our asset price forecast and investment analysis sections of our 2015-2019 Tanker Market Outlook. The results of our analysis suggest that our initial thesis was correct, but further specified that the 10-YR old tankers of these two vessel classes will outperform their younger counterparts.
In this note, we summarize spot market activity year-on-year (2014/2013). In 2014, the dirty and larger clean tanker segments straddled the line of recovery, while the smaller clean tankers remained under pressure despite positive expectations from the majority of market participants. Global spot market activity continued to rise from 2013 and the dirty tankers posted an increase of 6%, while the clean ships saw roughly 892 more fixtures year-on-year.