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18 September 2020 Week No. 38

Market Overview
VLCC Demand is Weak and Rates Fall Page 4
Suezmax Oh The Humanity Page 5
Aframax Afras Stuck on Bottom Page 6
Panamax Panamaxes Pushed Lower Page 7
Clean Rates Move Sideways Along the Bottom Page 8
Time Charter VLCC Inquiry Slows Page 9
S&P Vintage Suezmaxes Secure a Solid Return Page 11
Weekly Highlight Floating Storage: Is There a Second Wave? Page 13

Industry News
With tropical storm Sally gone, U.S. oil producers and exporters began to tally the damages left from the storm and return
to operation. The storm left fallen trees, flooded streets and about 570,000 homes and businesses from Mississippi to
Florida without power. Oil major Chevron Corp CVX.N began re-staffing its Blind Faith and Petronius platforms in the Gulf
of Mexico. Bristow Group, which transports oil workers from a Galliano, Louisiana, heliport resumed crew-change flights
to facilities in the west and central Gulf of Mexico. The Louisiana Offshore Oil Port, a deep-water oil port that handles
supertankers, reopened its marine terminal after suspending operations over the weekend. According to the U.S. Energy
Department about 1.1 million bbl/day of U.S. refining capacity were offline, including two plants under repair since Laura
and another paused by weak demand due to the COVID-19 pandemic. Sally had shut 508,000 bbl/day per day of oil
production and 805 million cubic feet of natural gas, more than a quarter of U.S. Gulf of Mexico output, and halted
petrochemical exports all along the Gulf Coast. The storm helped lift U.S. oil and gasoline futures. U.S. crude rose more
than 4% on Wednesday and gasoline gained nearly as much.

Shipping giant Maersk has informed that will cut jobs affecting a third of its staff as the company seeks to integrate its
seaborne container and in-land logistics businesses. The move comes as investors put pressure to speed its integration
transformation strategy. The company sold its oil and gas assets in 2017 to Total as part of its efforts to become a more
streamlined company focused on its container and in-land logistics business for large customers such as Walmart and
Nike. Chief Commercial Officer Vincent Clerc stated in an internal email sent to Maersk employees that the company will
be downsizing and will regrettably impact jobs due to duplicate roles and roles that will no longer be needed. The
statement referring to the move under the shake-up where Maersk’s Damco freight-forwarding business and Africa-
focused carrier Safmarine will be integrated into the Maersk by the end of the year and their brands will cease to exist. A
Maersk spokeswoman said that between 26,000 and 27,000 employees out of Maersk’s total headcount of 80,000 will be
affected by the restructuring.

Oil Supply & Demand

A slowing fuel demand amid renewed coronavirus infections and lockdown measures has led India’s crude oil imports fall
to their lowest level since March 2010 in July. The data comes from the Petroleum Planning and Analysis Cell (PPAC) of
the Ministry of Petroleum & Natural Gas and shows just how much recovery is struggling to rebound, along with a lot of
refiners that are closing down for maintenance in the region. The data showed a fourth straight month of declines in
imports, with 12.34 million tons -about 2.92 million b/d- imported in July, about 36.4% lower year-on-year. India is the
world’s third biggest oil importer and consumer and Asia’s third-biggest economy, with significant imports and exports in
the energy sector. On the refined products side, the picture is different. Data showed that clean products imports jumped
46.6% year-on-year, led by significant imports of fuel oil, which alone rose to 1.22 million tons for the month of July. The
increased fuel oil demand is attributed to refiners using it to maximize returns given the current price structures. Despite
that, depressed global demand has kept India’s product exports down, with 3.92 million tons exported in July, the lowest

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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seen since April 2018. A major component of this is the much lower demand for diesel, both inside and outside the
country as transportation sectors globally are still struggling with limited people movements as it compares to pre-covid
numbers.

In its monthly productivity report, the US Energy Information Administration (EIA) revealed that seven major shale
formations in the US are expected to show a decline of 68,000 b/d, down to 7.64 million by October. The decline would
be the first since last May and amid severe lockdowns and depressed oil prices. Crude oil prices in the United States are
still down about 40% from their peak at the beginning of the year, despite having gained significantly over the past five
months. While those gains have likely prompted some producers to become more optimistic and begin adding rigs, the
overall cost of production in conjunction with a lingering covid-19 pandemic suggest a more cautious approach may be
required. The Permian Basin of Texas and New Mexico is the only shale formation that is expected to show an increase
in output of about 23,000 b/d to 4.17 million b/d total. On the flip side, the largest decline in production is expected at the
Eagle Ford formation in Texas with an expected 28,000 b/d lower, down to 1.13 million b/d total. In a separate data sheet,
the EIA projects that natural gas output would decline for a second consecutive month to 80.6 billion cubic feet per day
(bcfd), with the Appalachia formation producing less for a third month in a row, down about 0.2 bcfd from the month of
September.

US $ / mt Fuel Oil Spot Prices US $ / bbl Crude Oil Spot Prices

500 80
450 WTI Brent
70
400

350 60
300
50
250

200 40

150
30
100
Philadelphia Houston 20
50
Rotterdam Singapore
0 10
Mar-19

Mar-20
Jan-19

May-19

Jul-19

Sep-19

Nov-19

Jan-20

May-20

Jul-20

Sep-20

Nov-20

Mar-19

Mar-20
Jan-19

May-19

Jul-19

Sep-19

Nov-19

Jan-20

May-20

Jul-20

Sep-20

Nov-20
Ship Finance
In late August, sources informed that Hafnia, together with a joint venture partner, invested US $10 million in Northwest
Innovation Works methanol production plant and now, Hafnia is planning to build methanol dual-fueled ships to transport
the methanol from the U.S. based production plant at the Port of Kalama, Washington, USA. As part of Hafnia’s
decarbonisation strategy, the joint venture will be transporting one-third of the methanol produced on 19-year charter
contracts and will be building the vessels transporting their share of the methanol Hafnia’s CEO Mikael Skov commented.
The joint venture investment will be used to develop a 3.6 million tons per annum of methanol production and export
facility aiming to replace coal-based methanol production by introducing ultra-low-emissions and zero liquid discharge
technologies. The total project investment stands at over US $2 billion. The plant will convert regionally sourced natural
gas to methanol, which will then be transported via a vessel equivalent to a MR cargo every four days for use in dedicated
materials pathway production in Asia.

Russia’s top shipping company Sovcomflot (SCF) informed this week that plans to raise at least US $500 million in an
initial public offering (IPO) on the Moscow Exchange. According to sources, the deal could be valued roughly US $10

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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billion. SFC is raising the money to spend on new projects and reduce debt aims to list in the Moscow Exchange in early
October with strong Russian interest. A banker involved in the deal pointed out its peers, it will trade at 7-12 times their
expected core earnings (EBITDA) of US $1.03 billion reported in the 12 months ended June 30. Sovcomflot, which
specializes in petroleum and LNG shipping, pointed to strong financials, including an adjusted EBITDA margin of over
70% for the first six months of 2020 and plans to pay at least 50% of its 2020 net profit as dividends, targeted at US $225
million, in an effort to persuade investors. Sovcomflot has informed that the best in the finance industry such as VTB
Capital, Citigroup Global Markets Limited, Sberbank CIB, J.P. Morgan and BofA Securities will act as joint global
coordinators and joint bookrunners for the offering. The Russian government, which will remain Sovcomflot’s major
shareholder after the IPO, has considered listing the company for years as part of its broader privatization plans.

Economy
U.S. and China relationships seem to be in a positive side since on Tuesday, Vice-Minister of Commerce and also the
deputy of China international trade representative, Wang Shouwen, welcomed U.S. companies to step up their investment
in China and share its development dividends. Mr. Wang, made the invitation during an online symposium attended by 15
member companies of the U.S.-China Business Council saying that China has been sincerely implementing the first phase
of the China-U.S. economic and trade agreement, working hard to create a sound environment for practical cooperation
between the enterprises of the two nations. Mr. Wang also mentioned that China firmly opposes the United States’ wrong
actions on Taiwan, Xinjiang and other issues, urging the U.S. side to work with China to jointly safeguard the overall
interests of China-U.S. relations. According to Wang, China will remain firm in its commitment to deepening reforms,
expanding and opening-up for the benefit of its economy.

The latest reading from the World Trade Organization (WTO) Services Trade Barometer showed modest gains in some
key sectors, suggesting a degree of resilience in the face of the pandemic. While yesterday’s reading of 95.6 is the
weakest on record for the index, and significantly lower than its baseline value of 100, the barometer’s measures are in
aggregate outperforming recent trends in actual services trade. Most of the barometer’s component indices remain below
trend but some show signs of bottoming out. Passenger air transport (49.2) has been hardest hit by the pandemic. The
contraction in this sector has been sufficiently large as to weigh on total global services trade. Indices representing
container shipping (92.4), construction (97.3), and the global services Purchasing Managers’ Index (97.0) also show signs
of turning around. Meanwhile, the ICT services index tumbled to 94.6 despite robust demand for these services during the
pandemic. The financial services index (100.3) was the sole component index that remained on trend as of mid-
September. In Q1-2020, the services trade activity index, which provides an approximate measure of the volume of world
services trade, registered a year-on-year decline of 4.3%.

Baltic Indices Market Indices

14,000 35,000
2400
BDTI BCTI
2200 12,000 31,250
2000
27,500
1800 10,000

1600 23,750
8,000
1400
20,000
1200 6,000
1000 16,250

800 4,000
12,500
600
2,000 8,750
400 S&P 500 NASDAQ DJIA - R Axis
200 0 5,000
Jun-19

Jun-20
Jan-19

Jul-19
Apr-19

Sep-19

Jul-20
Oct-19
Nov-19

Jan-20

Apr-20

Sep-20
Oct-20
Nov-20
Mar-19

Mar-20
Feb-19

Feb-20
Aug-19

Aug-20
May-19

Dec-19

May-20

Dec-20

Jan-19

Jul-19
Apr-19
May-19
Jun-19

Sep-19

Jul-20
Oct-19
Nov-19
Dec-19
Jan-20

Apr-20
May-20
Jun-20

Sep-20
Oct-20
Nov-20
Dec-20
Mar-19

Mar-20
Feb-19

Aug-19

Feb-20

Aug-20

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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WS
220
TD1 - AG / US Gulf
VLCC
2019 Adjusted to 2020 2020
200
180 Arabian Gulf - Red Sea
160
140 It’s been a quiet week with about 15-17 fixtures of which 7 were fixed by
120 Chinese charterers and one ship was reported to be fixed for long haul
100
80
business to a Western destination. Bunker prices for HSFO in Fujairah were
60 US $261/MT, and about US $248/MT basis USG. Respectively, the price of
40
20
VLSFO and MGO were US $328/MT and US $434/MT in Fujairah, and US
0 $313/MT and US $337/MT in the USG. The TCE values for TD2 and TD3C
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
are US $24,400/day and US $23,700/day basis Eco and no Scrubber at WS
WS TD3C - AG/CHINA rates of 36.0 and 35.0. Owners with scrubbers earn nearly US $2,900/day
320
2019 Adjusted to 2020 2020 higher TCE for Eco tonnage. Rates have finally rebounded this week, after
280
240
hitting new lows and in some cases negative territory late last week and early
200
this week. An AG/USG, was finally fixed at WS 19 C/C (as we noted in
160 previous reports “if one was available would likely go under WS 20 c/c”), and
120 the current rates from USG to China are now around USD 5.0 million for a
80 TCE of around US $37,000/day basis Eco and no scrubber.
40 A large number of VLCCs have been taken on T/C and the expectation is that
0 they will be used mostly for storage. However, before they can get to that
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
point, they may be doing a voyage and possibly several voyages. In the
meantime, the number of market cargoes are diminishing, and some of the
WS TD4 - WAFR / USG
280
cargoes that might have previously been available are going to relets. Until
240
2019 Adjusted to 2020 2020
ships are genuinely engaged in storage, they will still be on the list of potential
200
avails in all geographic sectors.
160
Atlantic Basin
120
We count 3 vessels fixed or on subjects for West Africa loading from early
80
October through the second decade of October. Rates have slipped a little for
40
modern tonnage to WS 38 which is equivalent to a TCE that is around US
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $24,500/day at current bunker prices. In the North Sea there was 1 fixture
reported without details, and there were no ships reported fixed this week
WS
240
TD15 - WAFR / China
again in the Mediterranean. There were no fixtures reported from Brazil this
2019 Adjusted to 2020 2020 week and we estimate the next done will be around WS 36-37 for a TCE of
200
about US $27,000/day. In the USG, there was 1 fixture reported with rates
160 expected to move above last done levels. The TCE for these cargoes is
120 around US $28,000/day. Storage options are also still in play for USG cargoes
80
as there are no definite discharges in the East. Brazilian lifters note that they
are also trying to get their clients to commit to cargoes and may need to ask
40
for storage options because buyers are reluctant to commit at this time. There
0 is simply not enough shore-side storage, and the universal hope is that as
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
economies start to get more active that oil demand will pick up as we approach
Lumpsum
US $Million USG / CHINA the end of this year.
24
22
20
18
16
14
Trend
12
10 Arabian Gulf: Weaker
8 West Africa: Weaker
6
4 UK-Continent: Weaker
2
0
Mediterranean: Untested
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Caribbean-USG: Firmer

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
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WS
SUEZMAX
TD20 - WAFR / UKC
300
2019 Adjusted to 2020 2020
West Africa
250

200 Activity was up for the week with some 15 vessels reported fixed/on subjects,
150 but this did little to halt the downward spiral of freight rates as tonnage
availability continued to overwhelm this market area. Rates to UKC-Med
100
dropped to the WS 35 level basis 130,000 mts (TCE barely above water), and
50 rates to the East fell to WS 36.5. A cargo discharging Durban was covered at
0 WS 42.5, whilst WS 30 was concluded for discharge USG. A current inquiry
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
into UKC-Med saw the charterer countering at WS 28. Can we now say we’ve
WS TD5 - WAFR / USAC hit bottom?
280
2019 Adjusted to 2020 2020
240 Black Sea - Mediterranean
200

160 There was consistency in this market week-on-week with a further seven
120 vessels reported fixed/on subjects. Freight rates BSea/UKC-Med hovered at
80
WS 45 basis 140,000 mts. Fixtures to the East were concluded at US $1.925
million basis STS BSea for discharge Singapore, and US $2.35 million basis
40
Algeria/Korea. Renewed chatter of Libyan exports opening up would bring
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec some welcome relief should it happen.
WS TD6 - BSEA / MED
Americas
280
2019 Adjusted to 2020 2020
240 This market area reversed course as volume fell to only some four vessels
200
reported fixed/on subjects. Two cargoes loading ECM for discharge UKC-Med
were covered at WS 37.5 and WS 38.5 basis 145,000 mts, whilst one bound
160
for Korea via the Panama Canal was concluded at US $3.2 million, an
120 improvement over last. A fixture Brazil/UKC-Med fetched WS 32 basis
80 130,000 mts. With little open inquiry, freight rates will likely remain flat going
40 forward into next week.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Arabian Gulf - Red Sea

WS S3 - AG / China
320
2019 Adjusted to 2020 2020 Volume rebounded this week as some 13 vessels were reported fixed/on
280
subjects, but freight rates yielded no semblance of any benefit as rates, in
240
fact, fell further week-on-week. A cargo loading BOT for discharge UKC-
200
Med saw an owner accept the charterer’s first counter at WS 14.75 basis
160
140,000 mts – setting a fresh low for this route. Voyages to the East traded
120
in a range; from WS 40 down to WS 35 basis 130,000 mts, whilst cargoes
80
into Australia-New Zealand fetched WS 38-42 respectively. Expect more of
40
the same ahead.
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Trend
West Africa: Softer
Black Sea/Mediterranean: Steady
Americas: Mixed
Arabian Gulf/Red Sea: Softer

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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WS
480
TD9 - CARIB / US Gulf
AFRAMAX
2019 Adjusted to 2020 2020
420
360 Caribbean
300
240 Aframax rates in the US Gulf were flat this week, holding at WS 50 for voyages
180
TA and mid WS 50s for voyages upcoast. One charterer was able to fix TA at
120
WS 42.5, but we are still assessing the market at WS 50 as it was on an older
60
vessel that needed dry dock in the Med. There are still plenty of prompt ships
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec available and we do not see rates improving in the near term.

WS TD19 - Cross Med

300
2019 Adjusted to 2020 2020
240
Black Sea - Mediterranean

180 Rates in the Black Sea / Med Aframax market were steady this week, fixing in
120
the low WS 60s for Black Sea / Med voyages and around WS 47.5 for cross
Med voyages. Just today General Haftar has said he expects to resume oil
60 exports from Libya, lifting owner’s hopes of a strengthening market.
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WS TD14 - SE Asia / EC Australia

360
UKC – North Sea – Baltic
2019 Adjusted to 2020 2020
300
Aframaxes in the UKC / Baltic moved down this week, with fixtures moving
240 rates to 80,000 mts x WS 80 for cross UKC and 100,000 mts x WS 37.5 for
180 Baltic / Med. Tonnage has built up over the past few weeks as rates are so
120
weak in the USG that very little tonnage is being drawn out of the UKC market.
Expect Afras to hold at these levels as we enter next week.
60

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WS TD8 - AG / SING
300
2019 Adjusted to 2020 2020
250

200

150

100

50

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Trend
Caribbean: Steady
Mediterranean: Steady
Continent: Steady

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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WS

450
TD21 - CARIB / US Gulf
PANAMAX
400 2019 Adjusted to 2020 2020
350
Caribbean
300
250
200 Panamaxes in the Caribbean came off slightly this week, with rates moving
150 down 2.5pts to WS 77.5 for voyages upcoast. Despite a bit of activity this week,
100 the tonnage list and extremely weak Afra market will continue to hold Panamax
50
rates down in the region.
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WS TD10 - CARIB / USAC

450
2019 Adjusted to 2020 2020
400
350
300
United Kingdom/Continent – Mediterranean
250
200 Rates in the UKC-Continent market were flat this week, printing at 55,000 mts x
150 WS 60 for ARA / USG. After going some time without seeing one done, two
100
ships were taken back to the Gulf this week, finally adding some activity to the
50
0
sector.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WS TD12 - ARA / US Gulf

300
2019 Adjusted to 2020 2020
240
West Coast
180
Another quiet week on the USWC in the Panamax market. We are assessing
120
next done slightly weaker at 50,000 mts x WS 160 basis Salina / USWC. As
60 always there is limited tonnage open on the West Coast, so we expect the
market to hold around these levels in the short term.
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Trend
Caribs: Flat
UKC: Flat
Med: Flat
West Coast: Steady

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While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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WS TC2 - CONT / USAC

CLEAN
480
2019 Adjusted to 2020 2020
420
UKC
360
300
Quiet start in the UKC market this week, with sentiment low, ship count high, and
240
activity seemingly nonexistent. Midweek saw some life, but the looming tonnage list
180
kept rates down, in some cases even sliding lower. This newfound inquiry continued
120
through the end of the week, though the market remains in charterers’ favor. Last
60
done on the benchmark TC 2 voyage traded lower at 37,000 mts x WS 87.5, a 22.5
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
WS point drop from the week before. Expect much of the same to start next week; a
spike in activity could quickly turn things around.
WS TC14 - USG/CONT
300
2019 Adjusted to 2020 2020 Caribbean
240 Nothing new to report in the Caribbean export market this week, with little activity and
too many ships. Though untested, we are calling the benchmark Caribs/USAC
180
voyage at a hypothetical 38,000 mts x WS 87.5 to close, a 12.5 WS point drop from
120
the week before. Expect much of the same to start next week, with inquiry likely
remaining the same, and ships ballasting through.
60
US Gulf
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
The lack of activity to start this week in the US Gulf market had owners quickly
WS TC3 - CARIB / USAC bracing for impact. Few cargoes worked throughout the week, though not nearly
300
enough to trim the constantly growing tonnage list. Rates managed to trend even
2019 Adjusted to 2020 2020
lower as the week progressed, with the benchmark USG/UKC dipping down to
240 38,000 mts x WS 57.5, 5 WS point difference from the week before - what is believed
to be a one-off. Similarly, USG/Caribs saw US $300,000 get done, while USG/ECM
180
dropped to US $150,000. Looking ahead, expect a bit more activity next week.
120 Rates will likely begin a slow climb up from this bottom, with the overhang of tonnage
that still needs to be cleared out.
60

0 Arabian Gulf
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The market in the Arabian Gulf continues to drag its heels as the market remains low
WS TC1 - AG/JAPAN
across all the vessels, MR activity has picked up to avoid rates slipping any further.
Tonnage in region remains high and it is unlikely that rates will pick up significantly
480 2019 Adjusted to 2020 2020 until October inquiries begin to emerge, giving us a clearer picture going forward.
420 Rates among the LR2s have softened slightly with low activity within the market
360 allowing charterers to demand lower, with TC1 rated at WS 72.5 while AG/UKC is
300 being reported at US $1.725 million.
240 The LR1 rates have fallen off slightly in line with the LR2s, with low activity across this
180 sector this week with a handful of LR1s covering MR cargos within the region. TC5 is
120 being rated at WS 70 while the next done AG/UKC looks to be US 1.2 million.
60 An uptick of activity within the MR market has helped to hold the other vessel classes
0 up this week, despite the increase in activity rates remaining low but steady.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
AG/EAFR is WS 90, TC12 is being rated at WS 77.5 while X-AG is being called US
WS
$140,000.
TC5 - AG/JAPAN

480
2019 Adjusted to 2020 2020
420
360
Trend
300 Continent: Steady
240 Caribbean: Steady
180 US Gulf: Steady
120 Arabian Gulf LR2: Flat
60 Arabian Gulf LR1: Flat
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Arabian Gulf MR: Steady

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 8
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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TIME CHARTER MARKET

VLCC

• The VLCC spot market revved back to life earlier this month with TD3C (AG/China) hitting US $33,000/day for eco/scrubber
fitted tonnage and we saw a flurry of 6 month positions put on subjects as a result due to renewed optimism in Q4 2020. With
the market seemingly plateauing this week, inquiry has slowed and many of these vessels have failed subjects (we count 4).
With the spot market coming off and Q4 paper now trading down to WS 43, we believe it will take some positive momentum
for inquiry to pick back up.

Suezmax

• The Suezmaxes remain dormant on the time charter front with spot returns below CAPEX and Charterers’ appetite
dwindled. Charterers may be able to look at profit share or floating rate arrangements, however rate ideas are likely lower
than they were a few months ago. This vessel class becomes popular in a firming spot market, so if there is a winter market
we expect this sector to become more lively. There is no action to report this week.

Aframax

• The Aframax spot market remains depressed with rates softening across the board. fixture activity has slowed with the
market is struggling to rebound as we approach the historically stronger point in the year for spot rates. A handful of
Charterers are still inquiring for tonnage on short term up to 12 months, but time cahrter ideas for the moment are misaligned.

LR2

• The LR2 spot market has cooled off and now showing signs of weakness with TC1 (AG/Japan) roundtrip voyages slipping
below US $10,000/day for non-eco tonnage. Despite the market softening, Charterers still remain interested for cover on this
size with a few vessels reported confirmed for 12 months this week. That said, Charterers interest is likely to shift back to
shorter durations spanning the winter months unless spot rates rebound in the coming weeks.

Panamax/LR1

• The LR1’s are diving lower with spot earnings on TC5 (AG/Japan) down US $5,000/day this week to Us $5,000/day at time
of printing. A few short term storage fixtures in addition to a 6 month fixture were confirmed this week with positions on the
continent. Charterers appear to be staying short on the inquiry as confidence for longer durations has halted with the fading
spot market.

MR/Handysize

• The MR spot market dipped further with returns in the Atlantic Basin down to US $10,000/day on the TC2/TC14
Triangulation while the East is also struggling with returns closer to US $6,000/day. Charterers are hesitant taking the
positions at the moment with the market coming off, but the majority of interest right now has shifted to short positions as
Charterers struggling to make sense of the levels pushed for longer term at the moment.

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 9
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
®
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TIME CHARTER MARKET

Time Charter Estimates

DIRTY 1 YEAR T/C 2 YEAR T/C 3 YEAR T/C 5 YEAR T/C

VLCC $30,000 $31,000 $32,000 $31,000
VLCC ECO $33,000 $33,500 $34,000 $32,000
SUEZMAX $23,500 $24,000 $26,000 $24,000
SUEZMAX ECO $25,500 $26,000 $28,000 $26,000
AFRAMAX $18,000 $19,000 $19,500 $19,000
AFRAMAX ECO $21,500 $22,500 $23,000 $21,500
PANAMAX $14,000 $15,000 $15,000 $14,500

CLEAN 1 YEAR T/C 2 YEAR T/C 3 YEAR T/C 5 YEAR T/C

LR2 $19,000 $20,000 $20,500 $19,000
LR2 ECO $21,500 $22,500 $23,000 $21,500
LR1 $17,000 $17,250 $17,500 $17,000
LR1 ECO $18,000 $18,250 $18,500 $18,000
MR $14,500 $14,750 $15,000 $14,500
MR ECO $15,500 $15,750 $16,000 $15,500

Fixtures
Dirty
NAME DWT BLT PERIOD RATE CHARTERER
Sur 300 2020 6 mos $40,000 Trafigura
Bahla 300 2020 6 mos RNR CNR
White Nova 298 2006 4-6 mos $35,000 Shell (fld)
Almi Hydra 319 2013 6 mos $35,000 Shell (cnfmd)
Maran Carina 306 2003 6 mos $34,000 Shell
Shizukisan 310 2009 12 mos $29,000 Unipec
Baghdad 310 2020 6 mos $42,000 Clearlake (fld)
Xin Yue Yang 300 2009 12 mos $30,000 Shell (subs)

Clean
NAME DWT BLT PERIOD RATE CHARTERER
FPMC P Ideal 109 2012 12 months $20,500 ST Shipping
BW Despina 109 2019 12 months $21,500 ST Shipping
Pike 73 2008 30-90 days $17,500 Vitol
Torm Venture 73 2007 45-90 days $17,500 Litasco
BW Kronborg 73 2007 45-90 days $17,500 Mabanaft
Nautical Deborah 75 2013 6+6 months $16.75+$18.5k Koch
Celsius Roskilde 46 2009 12 months $14,500 Ultratank
Taurus 50 2009 3+3 months RNR Chevron

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 10
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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SALE AND PURCHASE

SECONDHAND
NAME DWT HULL BUILT BUILDER PRICE BUYER
Kriti Spirit * 160,240 DH 2000 Daewoo $28.80m Russian.
Kriti Sfakia * 159,999 DH 2000 Hyundai H.I. “
Pelagos 111,775 DH 2005 Hyundai Samho $14.75m Vietnamese.
Mare Tirrenum 110,673 DH 2004 Mitsui (Tamano) $14.00m Vietnamese.
Minerva Zenia 105,851 DH 2002 Daewoo $12.00m
Ocean Laurel 46,549 DH 2010 Naikai Zosen $15.50m Spring Marine Management
Eagle Matsuyama ** 45,942 DH 2010 Shin Kurushima $15.70m Vipco
Ambassador Norris 45,290 DH 2001 Minami $10.00m Chinese.
Nala ** 37,263 DH 2001 Hyundai Mipo $7.10m

* en-bloc.
** SS/DD passed.

NEWBUILDINGS
BUYER DWT UNIT DELIVERY BUILDER PRICE
No fresh contracts.

DEMOLITIONS
PRICE
NAME DWT LDT BUILT BUILDER BUYER
($ldt)
Pirajui * 66,721 13,779 1990 Ishibras $219.50 Indian Breakers
Pirai * 66,672 13,779 1990 Ishibras $219.50 Indian Breakers
Pedreiras * 55,019 14,457 1993 CCN $219.50 Indian Breakers
Tag Navya ** 39,656 9,413 1991 Uljanik Indian Breakers

* En-bloc. ‘as is’ Rio De Janeiro. Gas-free for man entry.

** Auction sale, ‘as is’ Mumbai.

COMMENT

A pair of 20-year-old Suezmaxes have reportedly earned a very solid US$ 28.8 million in an en-bloc transaction this week.

The units in our discussion are the Kriti Sfakia and Kriti Spirit, each of about 160,000 dwt and built in respective Korean
shipyards Daewoo and Hyundai. The buyers are yet to be identified but are said to be a shipping company based in Russia.

Although we would place the charter-free fair market value closer to around the US$ 15 million mark each, the vessels are
listed with having imminently due or already due special and drydocking surveys. Either way the demolition value is nearly

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 11
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
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half of these proceeds, or about US$ 8 million delivered into the sub-continent; so all-in-all this deal offers a very solid return
for this age profile.

CONVERSIONS
NAME DWT HULL BUILT BUILDER PRICE BUYER
No fresh sales

FFA
Dirty
TD3C TD20 USG>CHINA USG>UKCM TD9
Contract
270,000 MT 130,000 MT 270000 MT 70,000 MT 70,000 MT

Sept 31.00 37.50 4.92 54.00 58.00

Oct 35.50 40.00 5.10 72.00 75.00
Nov 41.50 50.00 5.80 86.00 95.00
Q4-20 40.25 49.00 6.05 84.00 100.00
Q1-21 39.04 50.47 5.80 88.81 116.35
Q2-21 36.30 48.12 5.30 86.36 107.83
Q3-21 34.93 47.24 5.25 85.87 96.48
Cal-21 38.81 51.06 5.70 89.55 107.83
Cal-22 39.50 56.34 5.80 93.23 113.51

Clean LPG
TC2 TC14 TC5 TC6 AG>JAPAN
Contract
37,000 MT 38,000 MT 55,000 MT 30,000 MT 44,000 MT
Sept 103.00 64.25 72.00 134.00 55.00
Oct 93.00 78.00 80.00 112.00 51.00
Nov 110.00 90.00 88.50 136.00 50.00
Q4-20 108.00 90.00 88.50 133.00 50.00
Q1-21 109.98 80.37 83.94 159.02 46.00
Q2-21 104.89 75.93 81.91 140.16 40.00
Q3-21 101.83 75.23 88.02 134.43 39.00
Cal-21 105.91 76.64 89.04 145.90 41.00
Cal-22 109.30 77.10 96.78 150.82 41.00

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 12
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com
 McQuilling Partners, Inc.
®
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Lima ▪ Mexico City ▪ Mumbai ▪ New Delhi ▪ Rio de Janeiro
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WEEKLY HIGHLIGHT
We couldn’t help but devote some time into assessing whether the recent “chatter” about a second wave of floating storage
has the potential to become a reality and thus support tanker rates; rates which have been suffering by all accounts lately. In
short, we feel that there isn’t enough yet to warrant such a development, but as we have seen lately, stranger things have
happened.
The conversation began when a well-known trader fixed at least 5 VLCC tankers on short-term time charters, presumably to
be used for floating storage purposes - well after the observed peak in May-June (Figure 1). Those fixtures were followed by
similar ones from other major traders within the same week. All fixtures showed a similar pattern regarding the type of ship
(VLCC) and duration of 4 to 12 months. We are not privy to the motivation behind these fixtures although we do understand
that at least some of them pertain to newbuildings that are going to be loaded with clean products (Gasoil) instead of crude,
influenced by a contango opportunity.
Additionally, the fixtures coincided with a drop in crude oil prices last week, which somewhat increased the contango spread of
the commodity. Indicative is that the Brent 1/12 spread in the beginning of the month was at US $-3.21/bbl, whereas on
September 15th it had reached US $-4.80/bbl. The flurry of time charters immediately impacted the spot market thinking from
owners. The benchmark AG/CHINA voyage was at WS 25 on September 8th and reached WS 39 by week’s end.
Everything that followed is pointing to this being an isolated event and not a trend. Tanker rates have retreated alongside
increasing oil prices and narrower spreads. However, we feel that the “final word” lies with crude oil supply and demand going
forward. We know that transportation demand is struggling to return to previous levels and it is indicative of not only a slower
rebound from the pandemic, but also the glut of inventories. High inventories combined with increased OPEC output, which is
losing some ground due to the weaker demand, could mean another round of lower prices and possible profitable contango
structures. Having said that, we also anticipate OPEC and its allies reacting very quickly to such scenario and possibly
curbing production once again. With all that in mind though we still feel that tanker returns have a long way to go to reach
“healthy” levels again.

Figure 1 – VLCC Floating Storage Development

No. of VLCCs
120
Middle East - Iran Middle East South East Asia

Far East N. American G. Coast Northern Europe

100
Other

80

60

40

20

0
Mar-16

Mar-17

Mar-18

Mar-19

Mar-20
Feb-16

Jul-16
Aug-16

Feb-17

Jul-17
Aug-17

Feb-18

Jul-18
Aug-18

Feb-19

Jul-19
Aug-19

Feb-20

Jul-20
Aug-20
Sep-16
Nov-16

Sep-17
Nov-17

Sep-18
Nov-18

Sep-19
Nov-19

Sep-20
Jan-16

Jan-17

Jan-18

Jan-19

Jan-20
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18

Oct-18

Apr-19

Oct-19

Apr-20
May-16

Dec-16

May-17

Dec-17

May-18

Dec-18

May-19

Dec-19

May-20
Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

Source: McQuilling Services

Ocean House ▪ 1035 Stewart Ave ▪ Garden City, NY 11530 ▪ T: +1.516.227.5700 ▪ E: chartering.us@mcquilling.com 13
While McQuilling has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling makes no warranties or representations as to the accuracy of
any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling assumes no liability or responsibility for any errors or omissions in the
content of this report. This report is copyrighted by McQuilling and no part may be copied or reproduced for commercial purposes without the express written permission of McQuilling www.mcquilling.com