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Imarex Academy - Conjunction Junction









During my recent trip to New York – I was asked numerous times about classes/education on FFAs. Imarex Academy will be holding classes in NYC May 12-13 (Dry) and May 14-15 (Tanker). If you are interested, suggest you go to the following link ( ), or email Erlend in our Spore office at Or - just give me a call.




Tankers:  We have seen some positive developments since my last report of 11 March.  The first good news came in the form of longtime bear John Kartsonas’ upgrade of OSG, TK and GMR.  When bear turns bull, prices move - a lot!  Then we saw the Alpha Male and other “indirectly controlled” sled pullers take a 13D position in “Club 65%”, with some forward contracts that, if exercised, would push their position above 9%.  Hard to say what the endgame is here.  Free subscription to my daily mkt report for anyone who can tell me how this is likely to play out.  There are some who feel that SFL will benefit from this if it goes to completion.  In yesterday’s trading action – most of the names looked pretty good, with only a few of them slightly under the break even mark.

Dry Bulk:   The dry issues started a disconcerting slide on March 12th – associatable with the weaker physical markets and the resulting indices.  Seeing GNK go sub $50 – with DRYS sub $60, was quite a sight.  Yesterday, however, we did see some sunlight within the sector – with all of the major names up 6% or more.  An impressive day, regardless of any underlying reason – but we still need the physical mkt to turn North.  It seems that many “investors” have given up on the commodity play, dragging these high beta beasts deeper into the dungeon. If physical demand can remain firm – the worst might be behind us.


In ratings news...

    - John Kartsonas at Citi upgraded TNP to Hold.

    - Henrik With at DNB maintains his buy on FRO.OL (NOK 280) and OSG ($80) - and believes the potential acquisition makes sense from a valuation standpoint. He also points out the massive difference in G&A between the two firms, saying that consolidation should lead to significant reductions in this area.

    - Natasha Boyden at Cantor initiated coverage of D/S Norden with a HOLD (DKK 545) while maintaining a BUY on Top Ships ($21).


Dry Bulk

We see the indices slightly down today across the board. Not too much magnitude in front of us as we speak - but in comparison to March 11th - these numbers are concernably lower. Before mashing the panic button, however - we recommend letting the dust settle after the Easter holiday to see what lies beneath the veil.

Baltic Exchange Dry Index 7619 (down 65) BCI 9894 (down 88)
BPI 7982 (down 24)
BSI 5184 (down 83)
BHSI 2495 (down 23)

FFA volumes are thin today, as the Easter holiday season comes to a close. We still see the FFAs closely tracking the near term physical mkt more so than any sort of macro-ore related theme.

Contract Last Week's Close Approx Current Price Diff
======== ============= ============== ====
CS4TC Cal 09 $ 88,219 $ 8 7,000 - $ 1,219
PM4TC Q2 $ 66,450 $ 66,000 - $ 450
SM6TC Q2 $ 55,203 $ 5 4,500 - $ 703



Owners are still in control of the battlefield - and have managed to keep rates aloft despite overall fundamentals being only marginally favorable. Total demand doesn't seem excessive, while the supply of ships seems somewhere between ample and fair. This is why reading Freud's "Getting in Touch With Your Shipping Id" might be more valuable than the usual nautical pulp. The VLCC market for AG/East could currently be called 120 ($82k), though we could see some forward softening unless supply/demand balance can shift further in Owner's favor.

The Suezmaxes are enjoying a good run right now. The benchmark Wafr/Usac is fetching ws185 ($62k), while in the Med these ships are earning a hull-busting $140k/day. Let's see if spot Suezmax domain-master NAT can get in on some of this action before things subside. For those who follow all the asset classes - it is worth noting that the little brother Afra sector is white hot - ranging from $60k/day in the North Sea - all the way to $105k/day in the Black Sea.

Crude paper activity is increasing as the morning goes on. Volumes are "fair" at this point - with TD3 April gaining 5 points to 116. More noteworthy is that Q2 has traded up 4 points to 102 on good volume, while the Q3 and Q4 have moved up similar amounts - though volume has been mild. Although the curves are still backwardated, it appears the brighter minds in the business feel that the future is beginning to look even better. With the Suezmaxes making noise in the physical mkt - we have seen TD5 April trade up 2 points to 147.

Cont/ta clean continues to struggle - with some of the better minds in the business calling this route 210 ($14k). Reports of 205 getting done exist - although, we have a problem on our hands regardless of 205 v 210. The arb is flat, prompt ships are available and inventories are ample. While regional crude tanker markets are quite strong, this sector is "full of bourbon and can't stand up". Both TC2 and TC4 April have seen minimal trading - leaving prices mostly flat at 217 and 211 respectively.


When JF Knocks on Your Door



"How much for the ships?" asked the magnate from Oslo.  "35% off!" replied the market-at-large.  "Ok.  I'll take 10% of whatever it is you have" replied the magnate. 


The Imarex Report - Tues 13 March 2008

Good Day:

*** There will be no market reports until Monday March 24. If any info is needed, pls contact either Richard or Jon in the Houston office, 281 445 5151. Also – a reminder to please RSVP for the Imarex Happy Hour in New York City – tomorrow night (Wednesday 12th) – 1830hrs at The Overlook – on 44th between 2nd and 3rd ( The invites went out late – but if you are receiving this report – you are invited.



The VLCC market is looking a touch softer, again. Lack of demand continues to grow the position list – with AG/East now at the ws 90 level ($46k). Still good money – but will it last? The Suezmaxes have also given back some gains – as March stems have mostly been covered ex-Wafr. The benchmark Wafr/Usac has dropped to about 145 ($44k/day) – with the last cargo fixed on this route receiving 8 offers.

Crude FFAs are very thin today. TD3 March trades down to 3 points to 99, while April has lost 2 points to 90. As mentioned yesterday – you need to be looking at how a given price for an FFA relates to where the existing month-to-date (MTD) average sits. With the MTD average at ws 114, the current price of 99 reflects sentiment that the balance of the month should average about ws 92.

Cont/ta clean hasn’t changed too much – leaving the mkt flat at about 225 ($17k). The arb is looking much better though, which could allow this market to start a slow incline closer to 230-235. The arb might also explain some active paper trading on TC2, which has risen 6 points to 230 for March, and 4 points to 230 for April. TC4 April has also witnessed a positive surge – increasing 7 points to 234.

Dry Bulk


The indices are showing signs of losing momentum – with the BCI losing 310 points. Although the other asset classes were positive – the main BDI lost 64 points due to the slide in Capes. The week has started somewhat slowly as Charterers are trying to keep the market from overheating.

Baltic Exchange Dry Index 8560 (down 64)

BCI 12315 (down 310)
BPI 8630 (up 21)
BSI 5263 (up 57)
BHSI 2503 (up 20)

Paper activity has been fair – with prices coming down noticeably. The BCI above may be playing in role in depressing overall sentiment.

Contract Yesterday's Close Approx Current Price Diff
======== ============= ============== ====
CS4TC Cal 09 $ 96,047 $ 89,500 - $6,547

PM4TC Q2 $ 74,208 $ 70,250 - $3,958
SM6TC Q2 $ 60,875 $ 58,500 - $2,375



Tankers: CUJO and the God of War may have looked good, but the Alpha Male led the rest of the sled pullers deep into the abyss. It was not, by any means, Stephen King's "Storm of the Century", but - there is reason to believe that Andre Linoge is in the 'hood. Short sellers were heard whispering "Give me what I want, and I'll go away." This morning the bulls are pushing back, though – as FRO is up 4% in pre market US.

Dry Bulk: Yesterday was another episode of "Hell, Upside Down!" There was just nowhere to run, nowhere to hide. Today, we see a bit of hope. The Oslo names are up a point or two, while spot-market stalwarts TBSI and DRYS are up 7% or so in pre-market US.

Client # 9 (who looks like Bill Cowher)

For good order - I would like to remind readers of this report that juror #63 in "The State of Texas v Cornell Hosea" is in no way related to "Client # 9" in the latest news flash out of New York State. Further, the pseudonym’s George Glass and George Fox are unassociated – as the concept of nom de “plume” does not apply to these seemingly fictional characters in quite the same way. With that in mind - has anyone else done the math on the daily hire rate for a $5,500/hour "specialist"? Once again - the Imarex editorial board is here to do the heavy lifting. The equivalent, in terms of daily "hire", which is what we are really talking about - don't you think - comes to $132k/day. Yes - that's correct. Client #9 could have bought 1 day of Q4 CS4TC and taken his chances in the incredibly volatile dry bulk sector. Instead, he played the wilder market known as "politics" - and probably wished he had purchased OSG at $68/share under the name George Glass instead.



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