In Hellenic Shipping News 19/05/2015
The Panama Canal Authority made headlines last month, after approving new tolls both for existing locks, as well as for the new and larger locks, effective from the 1st of April of 2016, a date which will mark the completion of the multi year expansion project. According to the latest weekly report from shipbroker Charles R. Weber, “currently, tolls are assessed on the basis of Panama net tons (PCNT) based on the Panama Canal Universal Measurement System (PC/UMS) which uses a formula to measure total ship volume; specific toll values are levied for various band increments of PCNTs thereof, depending on the laden or ballast condition of transiting vessels. For tanker vessels transiting the existing locks from the effective date of the new tolls, the same toll structure will remain, though the $/PCNT toll rates will increase (albeit relatively modestly compared to our earlier expectation)”.
However, as CR Weber noted, “for laden tankers transiting the new larger canal locks, which will include Aframaxes and most Suezmaxes, a new structure will apply to laden voyages which levies tolls on the basis of PNCT but at smaller values for the higher PCNT bands characteristic to larger tankers in addition to a separate toll based on MT increments of the quantity of cargo being carried. Based on this structure, the average PCNT for the Panamax tanker fleet and our estimation of average PCNTs for Aframax and Suezmax units (precise PCNT data is not presently available for these classes), we note that the economy of scale which generally applies to larger tankers and which is distorted for tankers transiting the existing locks, will extend now to larger tanker classes capable of transiting the new canal locks”.
As a result, the shipbroker says that “this will present fresh opportunities for certain trades including medium-haul Aframax trades between the Atlantic and Pacific sides of the Canal – as well as certain longer-haul Suezmaxes trades. As we have previously noted, Suezmax could become attractive for voyages from the Middle East and West Africa to the US West Coast though CBS?FEAST voyages will only be shortened via canal transits to points north of Singapore, which could thus limit Suezmax demand and preserve the scale advantage of VLCCs for such trades. Also as previously noted, only 65% of the Suezmax fleet will be capable of transiting the new canal locks with a standard 130,000 MT cargo parcel while 20% will be restricted to cargo parcels smaller than 130,000 MT due to the new canal’s draft restrictions and 15% will be excluded altogether from canal transits due to beam restrictions”, CR Weber concluded.
Meanwhile, in the crude tanker markets this week, the shipbroker said that “demand in the VLCC market jumped this week, led by the Middle East market where the weekly fixture tally rose 139% w/w to an 18-week high of 43 fixtures. The Middle East surge came as charterers shored up remaining May cargoes and moved aggressively into the June program, for which cargo volumes are already exceeding expectations. In Saudi Arabia, crude production remains at elevated levels while a number of VLCC cargoes bound for Yanbu for inventory building ahead of the ramping up of refinery utilization at Yasref’s new 400,000 b/d refinery augmented exports even as the barrels will remain within Saudi. Simultaneously, SATORP’s 400,000 b/d Jubail refinery, which rose to normal utilization late during 2Q14, is likely providing more fuel oil to domestic power plants, reducing the number of power plant crude inputs ahead of the summer season and leaving more crude cargoes for export”.
Elsewhere, “Iraq has commenced exports of a heavy crude grade from Basrah in response to spec issues for light grades amid a progressively heavier production slate. The heavy stems, when added to light stems, have boosted total June Basrah VLCC cargoes to their highest levels since February. Importantly for this week’s rate progression, we note that charterers are reaching ahead of stem confirmations, which for much of the June program remain a week away, and this has removed the sentiment-driven negative rate pressure which generally follows demand lulls. On the supply side, hidden tonnage from large commercial managers is now believed to have been largely fixed following last week’s West Africa demand surge and amid the higher present rate environment, based on the disconnect between reported fixtures and earlier availability lists. The May program completed with 116 cargoes (two more than our earlier estimate) which has left 5 excess May positions – half the end-April figure. The smaller number carrying into June dates, against what now appears to be a longer June program, has substantiated the supply/demand tightness driving rates. The AG- FEAST route gained 11 points from a week ago to ws72.5 presently which has improved TCE earnings by 36% to a present assessment of ~$80,671/day”, CR Weber said.
It concluded its review of the market, by noting that “in the near-term, the supply/demand position appears set to remain tight; with 19 June cargoes covered thus far, a further 26 cargoes are expected to materialize for loading during the first 10 days of the month, against which there are 30 units available, implying a surplus of just four units. Factoring for Saudi’s OSP hike for Western buyers, Asian demand for West African crude should moderate from recent highs in tandem, but could still lead to sufficient purchases to yield ~3 VLCC fixtures in the West Africa market next week. With these drawing from the first decade June Middle East position list, the surplus Middle East positions could be as few as just two. On this basis, we expect that sentiment will remain positive during the upcoming week and support further rate gains accordingly”.
