Bermuda-based Nordic American Tanker (NYSE: NAT) has long been a standout performer in the oil tanker business, offering a transparent balance sheet, straightforward operating model, and best of all, fat dividends. While Nordic American deserves its high marks within the sector, it is long-time shareholders who have funded the company's success, and they've taken more than a few blows along the way.

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NAT – 1 Underweight, 1 Hold and 1 “Don’t buy now, wait for the pullback”.

- Jon Chappell reiterates an UNDERWEIGHT on NAT ($20), citing a potentially light Q4 dividend and the possibility that tanker values may be slipping more than anticipated. Though he feels their Suezmax acquisition is positive, the weak tanker rate environment may take a toll on this spot oriented name.
- Natasha Boyden maintains a HOLD on NAT ($35). She has lowered her Q4 EPS and dividend estimate.
- Homer Simpson reiterated a BUY on NAT (check yesterday’s chart at 2:45 pm), but later changed his BUY to “don’t buy it yet, wait for a pullback”. Homer loves NAT.
- Natasha Boyden maintains a BUY on ESEA, though lowers target to $6 (from $7).


Dry Bulk Comments from Erik Helberg:

•§ Chinese New Year comes early this year (January 26) and industrial production is thus likely to stay low until this holiday ends.
•§ Overall, we believe freight rates will come up from today’s opex levels as run-down inventories eventually need to be refilled again in combination with restoration of more normal credit conditions.
•§ New and lower iron ore contract prices should make Brazilian ore more competitive again and thus spur long-haul demand eventually.
•§ From a fundamental perspective, we are seeing iron ore levels at Chinese ports dropping and steel prices finding support.
•§ Supply side is also improving with scrapping of old tonnage increasing.

CS4 Q1        $14,393   $15,250   +$857
CS4 Cal 09  $19,644   $22,000   +$2356

PM4 Q1         $8,762   $8,500    -$262
PM4 Cal 09   $12,683   $13,125    +$442

SM6 Q1       $7,820  $7,900   +$80
SM6 Cal09   $9,991 $10,000   +$9

We are still seeing moderate volumes, though prices continue to improve on the back of better sentiment. The equities continue their push north on hopes that the dry bulk trade will indeed be better over the next few months than it has been over the past few months. This market still has a long way to go – though if the credit backdrop improves and demand for commodities returns – then we can expect demand for dry bulk tonnage to increase as well. I sense a much improved sentiment, though haven’t yet seen the physical market confirm the cheerier outlook.

Basis ws 2009 flat rates
VLCC AG/East              42.5 (TCE $43k/day)
Suezmax Wafr/Usac    92.5(TCE $51k/day)
Turkish Straits Delays   2n / 2 s

We are up to about 58 Jan fixtures in the AG – and rates remain soft/flat. The good news for Owners is that the fixing flurry over the past few days has helped chipped away at a lengthy position list. Though there still appears to be ample tonnage to handle the balance of Jan requirements – a shorter position list allows Owners to hang tough a bit longer in negotiations without fear of being undercut from multiple directions. It also allows for a potential mismatch in load window versus available ships on a given set of dates, though we are not at that stage just yet.

Crude FFAs have shown some life this am. TD3 Jan trades flat at 44 on good volume while the Q1 also trades flat at 44.


Clean
all basis 2009 ws flat rates
37kt Cont/Usac       130 ($17k/day)
38kt Caribs/Usac     135 ($15k/day)
55kt AG/East          100 ($20k/day)

Though the Cont/ta route has softened on low demand / good supply, the Caribs mkt has moved up a touch on the back of fair demand...combined with a firm USG/Europe backhaul mkt. AG/East mkt continues to soften as do other regional routes on the Pacific side.

Clean FFAs have seen a touch more activity than yesterday, though volumes are relatively light. TC2 Jan sits at 129 – in line with today’s spot number. In the East, TC4 Q1 trades down 6 points to 117 while TC5 Q1 trades flat at 112.

We have seen about 50 Jan cgos covered in the AG – putting us at about the halfway mark. Sentiment appears less than firm – though the market needs watching as the nextfew days should provide “real” post-holiday activity. This could of course bring better news for Owners – though it is expected that the rate slide will continue at a measured pace. The position list looks quite capable of handling what’s left for January.

From Omar Nokta at Dahlman Rose: “Data continues to verify stated OPEC cuts. OPEC sailings for the 4 weeks ended January 17th is expected to be 23.75 million bpd, now over 1 million bpd below the July peak. Although the full extent of the stated OPEC cut is unlikely to be fully realized before February, we are already seeing the impact of reduced production on the tanker market, with light activity and gradually softening VLCC rates over the past several weeks.”

Crude FFAs have started the year slowly with light trading seen thus far today. TD3 Jan is priced at about ws 43. This is in line with the spot market - therebyproviding for about the same $41k/day TCEthat we ended 2008 with. Worth noting is the flat curve for TD3 in 2009, with Q1 thru Q4 as follows: 43, 39, 41, 45. Flat indeed - with little expectation for a rate surge at any point through the year.


Clean
all basis 2009 ws flat rates
37kt Cont/Usac        137.5 ($17k/day)
38kt Caribs/Usac      130 ($15k/day)
55kt AG/East            105 ($22k/day)

The clean market remains mostly the same. Activity has been moderate, leaving rates largely unchanged. Eastern markets continue at their slow/soft pace on weak demand.

Clean FFAs are quiet as well. The curve for TC2 in 2009 is flatter than that for TD3 as follows: 132,132,131,130. Pancake. In the East, TC5 Jan trades down 7 points to 105 on low volume.

05 January, 2009

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Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) Obviously things were pretty quiet through the holidays. Of note were trades in Jan from 128 to 130, now offered at 130. The outlook here is still weak as sellers outnumber buyers today.

TC5 (LR1 AG-JP 55KT) Paper activity has been at a trickle. Over the last three weeks, Jan has traded down from 120 to 116 with offers more keen after Friday’s assessment. The total number of trades in that period could have been covered in a day though.

TC2 (MR CONT-USAC 37KT) The Jan contract trailed off from 145 (18 Dec) to 133 (30 Dec) and was assessed as low as 113 Friday. The Cal09 was offered sharply lower on Friday through the whole of 09.

Physical market talking levels:

MR: Sing/Jpn estimate W125-130 The last heard fix was the Oriental Gold at W170 from at least a week ago. We are obviously still waiting for fixture news basis this year’s flat rate.

LR1: Ag/Jpn estimate W 95-100 Platts expects the Japanese to fix Jan cargoes shortly after the long holiday break. The abruptly lower worldscale rates should make the transition easy for charterers, but a bit more difficult to swallow for owners.

LR2: Ag/Jpn estimate W 85-90 The Overseas Jacamar works out to something just below W90 for an LR2, so slightly below Platts.

Reported fixtures:

ORIENTAL GOLD	30	UNL	5-Jan	SPORE	JPN	W170	FXD
DL IRIS	90	GOIL	30-Dec	SKOR	SPORE	RNR	FXD
OS JAMACAR	75	NAP	17-Jan	AG	SKOR	W122.5	DAELIM
TORM HELENE	75	NAP	8-Jan	AG	JAPAN	W135	FXD
CHAO HU	65	CPP	1-Jan	SKOR	WEST	RNR	FLD
ST SHIP TBN	40	CPP	10-Jan	SIKKA	RED SEA	$620	FXD
ATLANTIC DIANA	30	UNL	10-Jan	SKO	CHILE	$2.2M	FXD
GAN SPIRIT	30	CPP	6-Jan	TAIWAN	AUST	RNR	FXD
ATLANTIC GEMINI	30	GO	10-Jan	SKOR	HKG	RNR	FXD
BAIZO	30	CPP	11-Jan	SKOR	HKG	$450	FXD
GAN SABRE	30	CPP	13-Jan	JAPAN	SPORE	RNR	FXD