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Outlook for the VLCC market looks bleak for the owners during the summerMarkets - VLCC rates plunge Jun 17 2016 As the demand for VLCC tonnage dwindled during the week, rates plunged dramatically both ex Meg. West Africa/Caribs remained soft and limited action was reported ex North Sea giving no support to the VLCC market in general. Stems at both BOT and WAfr have disappeared, not helping the owners weak position, Fearnleys said in the weekly report. While the market is waiting for Saudi demand to become official, the list of available tonnage is building up to more than ample to handle the expected demand. The outlook for the VLCC market looks bleak for the owners during the summer as charterers were in control. The Suezmax market became rather dull during first half of last week. With a big crowd of people gathered at Posidonia, there was not a great deal of enquiry and the tonnage list grew larger. As the festivities ended in Greece and daily life came back to normal, more cargoes entered the market for end/early dates. At time of writing (Wednesday), plenty of ships were absorbed ex West Africa but this has thus far made no difference to the rates, due to the previous build up of ships. Looking into our crystal ball, we don’t foresee any significant change to the market at present. Aframaxes in the North Sea and Baltic experienced an upswing in rates as the third week proved to be very busy both for N Sea and Baltic on the cargo side. This firm sentiment will continue into July, as the tonnage list is still very tight for anyone with cargoes loading in the last week of June. In the Med and B Sea, we have, as expected, seen plenty of cargoes coming onto the market earlier this week. Rates have remained quite stable as there was an overhang of tonnage at the beginning of the week. The strike in French ports has ended for now and, as a consequence, vessels are moving out again. This will help the charterers maintain the two digit rate numbers. For the rest of the week, we expect the market to remain at current levels, with a small chance of three digit numbers being done, Fearnleys concluded. As reported last week, Sungdong has won an order for two, option two LR1s. The buyer was Tsakos Energy Navigation (TEN) and the total value of the contract for the four LR1 tankers could reach up to USD 170 mill, as brokers put the price at $42.5 mill per vessel. The first two LR1s are due for delivery in the first half of 2018. In the S&P sector, as well as the ‘British Fidelity’ sale reported last week, BP was reported to have sold sistership ‘British Loyalty’ on the same terms and conditions in what was thought to be an ‘en bloc’ deal. Elsewhere, the 2008-built MR ‘Atlantic Hope’ was believed sold for $22 mill to unknown interests. Tsakos Energy Navigation (TEN) has confirmed that its recently delivered VLCC ‘Ulysses’ was fixed for a 40-month charter with a Far Eastern end-user. Gross revenues are expected to be in the range of $50 mill. The charter is scheduled to commence in early July upon the expiry of the vessel's maiden spot employment. "We are pleased to announce an accretive fixture and the initiation of another long-term relationship with a first-class end-user," Nikolas Tsakos, President and CEO of TEN, commented. "TEN's tested and successful strategy has been through the building of long-term relationships with oil majors and quality end users. With limited tonnage supply going forward, growing demand and the creation of new sea trade routes, market prospects remain positive." A few weeks ago, brokers reported that the ‘Ulysses’ had been fixed to Glovis at $35,000 per day. Nordic American Tankers (NAT) has also confirmed that an ExxonMobil subsidiary has fixed one of its Suezmaxes for 18 months, option 12 months. NAT said that the gross revenue will be $25 mill, reflecting a daily rate of between $25,000 and $30,000 against a cash breakeven of about $11,000 per day for each vessel in the fleet. Chairman & CEO, Herbjørn Hansson, said: "At this time, we also change the name of our chartering department from Orion Tankers (which was initially established as a chartering pool with external participants) to NAT Chartering. “All of the suezmaxes under our umbrella are now owned by NAT. We have no plans to invite other companies into the chartering arrangements of NAT. NAT Chartering is headed up by Erik Tomstad who is reporting to me," he stressed.
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