Ton Mile Trader

Crude
VLCC Ag/East 50  ($33k)  about same
SM Wafr/Usac 60  ($17k)  softer

V rates remain about the same on moderate fixing activity. We now have 52 fixtures in the books, with a position list that should be able to handle the next few weeks without much problem. Limited activity for Wafr SMs have reduced rate expectations a point or two. OPEC compliance is now down to about 72% - which comes as no surprise. If prices continue to rise, while they continue to increase production, it is safe to say they will continue to continue pumping more. I know I would. Rising bunkers are becoming a factor in the face of flat/falling Worldscale rates.

Crude FFAs have again been slow. TD3 July bid/ask implies a price of about 47, in line with yesterdays close – though a few points below spot. The Q4 trades down 1 point to 45.

Clean
37kt Cont/ta   105  ($7k)   about same, possibly softer for today
38kt Cribs/up  80  ($1.5k)  about same
55kt Ag/East  95  ($13k)   about same

Activity off the Cont has slowed and rates appear to have peaked for the time being. The Bald Viking of Southport tells us that MRs have been put on subs for loading of diesel off the USAC – though it appears the matter is a tad overdone – as there is likely only one, maybe two – cgos to actually get lifted. Also worth noting is the expected demand for mogas into Nigeria at some point next week. This has lifted sentiment – as can be seen in regional FFA pricing.

We are seeing very good activity on clean FFAs. TC2 July trades up 6 points on the July contract to 108 – apparently on the back of potential mogas demand into Nigeria in the near future. Not-so-little-known TC6 trades flat in Q4 at 123. In the East, prices are down. TC4 July and Aug lose a few points each to 84 and 91, while TC5 July and Aug lose 4-5 points each to 94 and 98.

IMAREX - ASIAN CLEAN TANKER FFA REPORT

2 July, 2009

OF INTEREST TO ALL:

Don’t miss the chance to register for the Imarex Academy Professional FFA Trading Courses in 2009:

This is a unique opportunity to learn how FFAs work, how they trade, how they link to the time charter market and to product arbitrage. Learn how to trade these exciting derivative contracts effectively. For more information and registration forms, please refer to http://www.exchange.imarex.com/imarex-academy/category488.html

Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) Paper markets were lively, but weaker through the curve. Jul started and ended with 85 given and followed 85 bid. Q3 saw 93 and 92 given and worked 91 at 93 after. Q4 traded at 6.5 pts over Q3 three times as a spread which set 98.5 and 99 as Q4 levels. Thereafter 97 at 100 was worked. The net effect was to see contango erode further as traders foresee no change in the vessel supply situation.

TC5 (LR1 AG-JP 55KT) As with the TC4, TC5 was in the red again. Jul paper didn’t chalk up a trade until midnight, but 97.5 was lifted as part of a Jul/Sep spread at -7.5. The market worked 96 at 97.5 on the follow. Aug was given from 104 down to 102 and was 102 at 103.5 at the close. Q3/Q4 spread traded -5.5 with the Q3 leg at 101. The Q3 bid that followed was 98 with offering at 102. Q4 traded 108, 106.5 (spread) and 107 last with 105.5 at 106.5 left working.

TC11 (TRIAL SKOR–SING 40KT) The assessment slipped another 4¢/mt to $8.94. No new fixtures were reported to back up this quote.

Physical market talking levels:

MR: Sing/Jpn estimate W75 Yesterday’s report made reference to a week old MR position list which at the time had some 35-40 vessels open AG PPT. We’ve subsequently heard that the figure has been whittled down into the teens. The GOTLAND ALIYA is a small improvement for India/AG loading, but not enough to break out the champagne for.

LR1: Ag/Jpn estimate W93 The spot assessment eased a tick and likely should not have been as high as W94 as nothing has fixed (to our knowledge) higher than W92.5. A look at the position list shows 9 LR1s open AG before the 10^th and just 2 or 3 LR2s. Where then are the cargoes? At the end of last week, all the chatter was about owners holding out for 100, but with another 2 vessels failed (see STARLING & SELINI below), the push over the top will be harder to make.

LR2: Ag/Jpn estimate W85 Spot held steady here while as mentioned above, open AG positions remain few. We have heard that some of the vast herd of vessels being used for floating storage in the West are about to be released back into the wild, but this is likely not going to make a dent in the estimated 50 in such use. The SUVRETTA tops the ATLANTIC SPIRIT (reported on the 19^th) if UKC by $250k.

Reported fixtures:

IMAREX - ASIAN CLEAN TANKER FFA REPORT

2 July, 2009

OF INTEREST TO ALL:

Don’t miss the chance to register for the Imarex Academy Professional FFA Trading Courses in 2009:

This is a unique opportunity to learn how FFAs work, how they trade, how they link to the time charter market and to product arbitrage. Learn how to trade these exciting derivative contracts effectively. For more information and registration forms, please refer to http://www.exchange.imarex.com/imarex-academy/category488.html

Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) Paper markets were lively, but weaker through the curve. Jul started and ended with 85 given and followed 85 bid. Q3 saw 93 and 92 given and worked 91 at 93 after. Q4 traded at 6.5 pts over Q3 three times as a spread which set 98.5 and 99 as Q4 levels. Thereafter 97 at 100 was worked. The net effect was to see contango erode further as traders foresee no change in the vessel supply situation.

TC5 (LR1 AG-JP 55KT) As with the TC4, TC5 was in the red again. Jul paper didn’t chalk up a trade until midnight, but 97.5 was lifted as part of a Jul/Sep spread at -7.5. The market worked 96 at 97.5 on the follow. Aug was given from 104 down to 102 and was 102 at 103.5 at the close. Q3/Q4 spread traded -5.5 with the Q3 leg at 101. The Q3 bid that followed was 98 with offering at 102. Q4 traded 108, 106.5 (spread) and 107 last with 105.5 at 106.5 left working.

TC11 (TRIAL SKOR–SING 40KT) The assessment slipped another 4¢/mt to $8.94. No new fixtures were reported to back up this quote.

Physical market talking levels:

MR: Sing/Jpn estimate W75 Yesterday’s report made reference to a week old MR position list which at the time had some 35-40 vessels open AG PPT. We’ve subsequently heard that the figure has been whittled down into the teens. The GOTLAND ALIYA is a small improvement for India/AG loading, but not enough to break out the champagne for.

LR1: Ag/Jpn estimate W93 The spot assessment eased a tick and likely should not have been as high as W94 as nothing has fixed (to our knowledge) higher than W92.5. A look at the position list shows 9 LR1s open AG before the 10^th and just 2 or 3 LR2s. Where then are the cargoes? At the end of last week, all the chatter was about owners holding out for 100, but with another 2 vessels failed (see STARLING & SELINI below), the push over the top will be harder to make.

LR2: Ag/Jpn estimate W85 Spot held steady here while as mentioned above, open AG positions remain few. We have heard that some of the vast herd of vessels being used for floating storage in the West are about to be released back into the wild, but this is likely not going to make a dent in the estimated 50 in such use. The SUVRETTA tops the ATLANTIC SPIRIT (reported on the 19^th) if UKC by $250k.

Reported fixtures:

Capital Link Indices
Maritime Index   1551  -16  -1.01%
Tanker Index      1967  -29  -1.45%
Dry Bulk Index    901   -25  -2.70%

- Urs Dur maintains a HOLD on TK. “Despite our current estimates that TK will be profitable and liquid over what looks to be a very difficult 2009...we believe that a week summer tanker spot market and a broad variance in consensus opinion will keep TK shares range bound for the near term.”

Anders Rosenlund on asset values: “Despite the short term spike in asset prices, we still see the risk of ship yards lowering newbuilding prices as this would eventually impact asset values negatively. There is significant overcapacity among yards while order intake is virtually non-existent. Simultaneously, input costs such as steel, energy and subcontractor costs are down from peak, enabling yards to lower prices further to attract new orders. Furthermore, Governments (e.g. South Korea and China) have shown willingness to support the shipbuilders to ensure shipbuilding activity continues, as this is of economic importance. Although there is some positive data regarding demand for vessels, shipping remains cyclical by nature and we’re not yet convinced the trough is behind us.”

Baltic Indices
BDI  3742  down 15
BCI   7122  down 119
BPI   2984  up 80
BSI  1703  up 2
BHSI 749  down 5

The Panamax sector appears more active than other asset classes – as period inquiry and demand for coal has provided support. We continue to see doubts as to the sustainability or ore and coal demand into China...which introduces the specter of another summer collapse of inquiry from the Middle Kingdom. The futures market call for an obvious decline in Cape rates going forward – though nowhere near the extent of what we saw in last years Q4 debacle.


FFAs - light volumes with a bit of upside

Cape Q3: $56,250, up $750
PM Q3: $21,000, up $250

Crude
VLCC Ag/East  50     ($33k)  possibly softer
SM Wafr/Usac  62.5   ($19k) softer

Nothing too new on the V front. The July tally is up to 48 – placing us at about the 50% mark for the month. Position lists appear to favor Charterers going forward – though not by enough to minimize their efforts to keep rates where they are. The Atlantic basin has softened further as ample SM positions vie for fewer July cgos. If July volumes ex Wafr amount to the March-April-May average of about 94m bbls, then we are almost done...a bad sign for Owners. If, however, we end up seeing 117m bbls, as we did in June, then Owners will of course have decent leverage in fighting for better rates.

Crude FFAs have been quiet. TD3 July is now offered at yesterdays closing of 51, implying a next done at the 49/50 level, a few points below spot.


Clean
37kt Cont/ta    105  ($7k)   about same
38kt Cribs/up   80  ($1.5k)  about same
55kt Ag/East   95  ($13k)  about same

Not much has changed from yesterday. Fixing activity can be found, though not to the extent that rates are facing upward pressure. Eastern clean remains somewhat steady.

TC2 July has been quiet, though we did see July trade a 105, down 3 points, and then offered over at the same level. Crystal ballers therefore expect rates to remain about where they are for the next few weeks. Eastern FFAs have seen good volumes, though TC4 and TC5 lose 2-3 points each on the Q3 to 92 and 101.

EIA Estimates from Reuters Poll:
Crude -2.0
Mogas + 1.9
Dist + 1.5

IMAREX - ASIAN CLEAN TANKER FFA REPORT

1 July, 2009

OF INTEREST TO ALL:

Don’t miss the chance to register for the Imarex Academy Professional FFA Trading Courses in 2009:

This is a unique opportunity to learn how FFAs work, how they trade, how they link to the time charter market and to product arbitrage. Learn how to trade these exciting derivative contracts effectively. For more information and registration forms, please refer to http://www.exchange.imarex.com/imarex-academy/category488.html

Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) All of the clean market was in the red yesterday. Jul paper was consistently given at 88, Aug at 98 and Q3 at 96 & 95. The close saw Jul 85 at 87, Q3 92.5 at 95 and Q4 101 at 103. This market is still showing some decent contango as spot has not risen over the last two weeks along with TC5.

TC5 (LR1 AG-JP 55KT) A further erosion of contango took place with Jul paper dipping from 102 to sub-100 then recovering later. Q4 was given at 107 three times before getting lifted at 108. The close saw Jul 98 at 102, Q3 102 at 107 and Q4 108 at 109 for what is now a remarkably flat curve.

TC11 (TRIAL SKOR–SING 40KT) The month ended with a third consecutive day of decline. $8.98 was down 7¢ for a total of 22¢ from the peak. (see chart below)

Physical market talking levels:

MR: Sing/Jpn estimate W75 We’re running out of synonyms for “dull” here. One leading publication pointed out what we noticed last week, that the AG has a particularly long tonnage list, and that the Singapore market is slow. Welcome to the party.

LR1: Ag/Jpn estimate W94 We’re beginning to have our doubts here. The talk in the physical market is of owners asking for triple digits, but the paper market has at this point almost leveled through the calendar. The DIFKO CHASER is a 1990 built girl, and although just reported to us yesterday, was likely fixed early last week. China discharge, depending on where, can make a 5-10 pt difference vs Japan. As such, we’re not taking this one as a good example of market level.

LR2: Ag/Jpn estimate W85 Nothing new to report.

Reported fixtures:

The fine folks at Bloomberg recently interviewed Mike -- and seeing how Mike is too modest to be his own hype machine, allow me to do the honors: http://media.vmsnews.com/MR.pl?id=062509-2635526-V001925830.  Check out the video and enjoy the Curt Schilling resemblance.

Capital Link Indices
Maritime Index   1,566  - 13
Tanker Index      1,996  - 4
Dry Bulk Index    926     -12

- Scott Burk maintains a PERFORM on OCNF. “The valuation is compelling, and we believe additional accretive acquisitions could drive near-term stock upside.”
- Natasha Boyden maintains a HOLD on OCNF ($1.50). “As a result of the proceeds raised from the equity offerings, OCNF's balance sheet is healthier... however, at a substantial cost to shareholders.”