PIPELLINE POLLITICS
8tth August 20
014
Ma
ajor pipeline companies including
i
Enb
bridge, Trans Canada and
d Kinder Morrgan have be
een keen to invest billions of
do
ollars in pipeline infrastructure to allow
w Canada’s c
crude oil pro
oducers to reach more lu crative mark
kets beyond the
US,, where Cana
adian crude is sold at a heavy
h
discou
unt. Howeverr, regulatory and
a
political barriers conttinue to stand
d in
the
e way of prog
gress.
Tra
ansCanada iis still awaitin
ng approval in its two kkey projects; Keystone XL from Hard
disty, Alberta to Steele City,
C
Ne
ebraska (ultim
mately conne
ecting to the
e US Gulf) an
nd Energy Ea
ast from Albe
erta to Monttreal and Sa
aint John on the
Atlantic coast. Keystone XL
X has been
n the most p
publicised off all the pipe
eline projectts and has faced
f
the most
m
ressistance. Whe
en first propo
osed, Keystone XL presen
nted a sensib
ble way for the US to sec
cure a stable
e energy supply.
Ho
owever, grow
wing US shale production handed
h
critic
cs another re
eason to question whethe
er Keystone XL
X represents the
be
est interests o
of the nation
n. Whilst it se
eems certain that a decision will not come befo
ore the midte
erm elections in
No
ovember, a ffinal decision
n could be forthcoming
g in 2015. Sh
hould approv
val be found
d in 2015, Canadian
C
cru
ude
exp
ports from th
he US Gulf co
ould potentia
ally become
e commonpla
ace from 2018. TransCan
nada is also pressing ahe
ead
witth the appro
oval process for its Energy East projec
ct, generally
y considered to be an a
alternative to
o Keystone XL. If
Keystone fails tthen the Energy East projject could ca
arry 1.1 millio
on b/d from Alberta to M
Montreal and Saint John, the
g VLCCs. Not all of the 1.1 million b/d capacity will be desttined for exp
port, with so
ome
latter capable of handling
de
esignated for domestic refining although a significa
ant quantity will be exported. Howeve
er as neither Energy East nor
Keystone XL will terminate on
o the Pacific
c coast, any ttrade to Asia
a would gene
erate healthyy tonne mile demand.
e’s
North
hern
Enbridge
Gateway project was
w
recently
approv
ved,
albeit
with
209
conditions which must
m
be satisfied before work
w
can co
ommence. The
proposed
eline
pipe
would have a capacity
00 b/d and run
of 525,00
Bruderhe
from
eim,
Alberta to Kitimat on
the Westt Coast wherre a
new terminal will be
built fo
or VLCCs. In
addition to the exp
port
pipeline,, a 193,000 b/d
b
pipeline will be builtt to
import
condensa
ate.
Cru
ude could start flowing as early as 2018, howev
ver with opp
position grou
ups promising
g to delay the constructtion
pro
ocess, uncerttainties rema
ain.
Kin
nder Morgan
n’s proposed expansion of the existin
ng 300,000 b/d
b
pipeline from Edmon
nton, Alberta
a to Vancou
uver
wo
ould see cap
pacity rise to
o 890,000 b//d by the e
end of 2017 subject to regulatory
r
ap
pproval. To accommodate
inc
creased crud
de flows the
e Westridge Marine Term
minal will inc
crease capacity to allow
w three Afra
amaxes to lo
oad
sim
multaneously,, thus increassing Aframax demand in tthe region.
De
espite backin
ng from the Harper Gov
vernment th e political la
andscape can change quickly and
d with electiions
loo
oming toward
ds the end of 2015, the outcome is fa
ar from certain. However for
f Canada tto avoid hea
avily discountting
its crude, it mu
ust find mark
kets outside of the US, w
with Asia the
e prime destination and Aframaxes and VLCCs the
pro
obable bene
eficiaries.
CRUDE
Mid
ddle Easst________________
____________
A pa
articularly c
challenging start to the week for V
VLCC
own
ners saw rattes hit a low
w of ws 38.5 to the East , but
towards the en
nd of the period,
p
charterers deciided
to fill
f their sho
opping trolle
eys, and th
he conseq uent
mom
mentum sta
alled the do
ownward trrend, and tthen
allow
wed for a m
modest re-inflation to a peak ws 44.5
Eastt and ws 27
7.5 to the West
W
via Suez. Ownerss are
now
w playing ha
arder ball, but
b the Aug
gust program
mme
is en
ntering its v
very final phase,
p
and the window
w of
opp
portunity fo
or somethin
ng more meaningful
m
isn’t
very
y wide. Suezmaxes fo
ound little volatility u
upon
goo
od supply, and nond
descript lev
vels of enq
quiry.
Rate
es eased to
o 130,000 by
y ws 70 Eastt and to the
e low
d to
ws40
0’s West in
n conseque
ence. Afram
maxes failed
realise their pottential, and softened a little to aro
ound
80,0
000 by ws 117.5, but th
here’s a po
ossibility of m
more
see--sawing ove
er next week.
We
est Africa
a________________
____________
Suezzmaxes spe
ent most off the time here upon
n the
defe
ensive, but held the lin
ne at ws 70 to US Gulf and
ws 72.5
7
to Euro
ope. Charte
erers then put
p just eno
ough
into the markettplace to ra
aise hopes somewhat,
s
and
rate
e demands moved hig
gher. Chartterers held their
nerv
ve, and the
ere’s an imp
passe just fo
or now, tho
ough
perh
haps some upward drifft maybe en
ngineered e
early
nextt week. VLC
CCs had a busier time of it - iniitially
from
m chartererss cashing in
n on the early Arabian Gulf
malaise and se
ecuring 260
0,000 by ws 46 to the East,
and
d US$3.65 m
million to We
est Coast India and e
even
inter-Atlantic ru
uns featured
d at ws 50/52.5, but ass the
Middle East rreversed, and
a
the Caribbean
C
Sea
bec
came a via
able altern
native to ballast
b
to, rrates
bou
unced again to aroun
nd ws 50 to
t China o
once
aga
ain.
Me
editerran
nean_____________
____________
Prom
mpt Libyan
n business injected some life into
Afra
amaxes here, and mosst of that was
w on prom
mpter
dates, thereby stripping
g early av
vailability, and
ving rates in
n a northerlyy direction to 80,000 by
b ws
mov
95+ X-Med with expecta
ation of furrther short term
gain
n. Suezmax
xes didn’t re
eap any re
eal benefit from
thatt and for most
m
of the w
week existe
ed on thin fayre
f
with
h a negativ
ve feeling p
persisting until
u
a little late
hop
pe was smo
oke signalled
d from Wesst Africa.140
0,000
by ws
w 72.5 for Black Sea//Europe is about
a
the mark
m
for now,
n
but ma
ay improve a tad.
Ca
aribbean
n_________________
___________
Afra
amaxes end
ded their re
ecent, exte
ended, bulll-run,
as supply/dem
mand movved more noticeably in
cha
arterers favo
our to press rates down
n from 70,00
00 by
ws 170
1 upcoast, to ws 1355, and furthe
er rate erosiion is
possible. VLCC
Cs remain
ned very tight
t
on local
positions so tha
at chartere
ers had to re
ely upon fa
ar off
ballasters to create
c
some
e degree of
o competition.
es operate at close to
o US$6 millio
on to Singap
pore,
Rate
and
d US$5.2 million to We
est Coast India, and are
unlik
kely to move off anytim
me soon.
No
orth Sea_
__________________
____________
A much
m
betterr performan
nce seen fo
or Aframaxe
es on
hea
avy late-week interest.. Rates hav
ve now jum
mped
up to
t as high as
a 80,000 byy ws 130 cross UK Cont, and
ove
er 100,000 by
b ws 105 from the Baltic.
B
The heat
shou
uld last for a few more
e working days
d
yet. VLLCCs
didn
n’t get any solid attenttion from th
he area - a deal
wass attempted
d at US$6,055 million for forties crud
de to
South Korea, but failed sub
bjects, and the fuel oil 'Arb'
S
was still un
neconomic at the USS$4.5
to Singapore
million level ow
wners need
ded to fore
ego moving to
er load area
as.
othe
CLEA
AN PROD
DUCTS
Easst________________________
__________
The LR2’s contin
nue on theirr rich vein off form with rrates
ady at 75 x w
ws 115 for AG/Japan,
A
giving return
ns to
stea
own
ners at around US$22,00
00 per day, basis round
d trip.
Goin
ng West has seen rates in
i the US$2.8
8m’s for Sikka
a/UK
Con
nt. Fixture of the week was
w 90 x ws 137.5 for a W
West
Coa
ast India voy
yage into Ea
ast Africa giv
ving returns of a
splendid US$35kk a day: ab
bout time to
oo! Demand
d for
nage is fairly constant and as suc
ch rates rem
main
tonn
solid
d with no neg
gative signa
als.
LR1’s continue to improve with rates rising
r
to 55 x ws
i very date dependantt with
120 AG/Japan, although it is
etting even better ratess. On Friday 55 x
shorrter hauls ge
ws 145 went o
on subs for a short vo
oyage into Pasir
dang and Sikka/East Affrica paid 60
6 x ws 135.. This
Gud
wee
ek saw a ra
aft of vessells delayed and in nee
ed of
repla
acing. How
wever replac
cement ship
ps jacked rrates
and we saw w
ws 127.5 on subs for a long haul into
an. X-AG ha
ave been active
a
and difficult
d
to co
over;
Japa
leve
els around the US$500k mark. The market rem
mains
busy
y, the delay
ys are not getting
g
any better, so rrates
shou
uld hold in th
he coming week
w
.
The AG MR ma
arket is still not taking off in the ssame
arish fashion that we have
h
seen on the LR sizes
bea
rece
ently, but things are defiinitely gently
y firming and
d last
done is gradua
ally getting beaten little
e by little. TTC12
uld now fix a
at around 35
5kt x ws 110 and AG or SSikka
shou
to Gizan
G
runs h
have now crept
c
up to around the
e US$
700K
K mark…whiich is a rise of about US
SD 50K since
e the
beg
ginning of tthe week.
Sikka or AG/East A
Africa
carg
goes have c
crept up from 35kt x ws 155 to ws 1
162.5
leve
els since the
e beginning of the wee
ek. AG/Westt has
also been testted this we
eek at US$
$ 1.525M. X
X-AG
carg
goes are ussually the most
m
market--sensitive ro
outes,
but still haven’t jumped much
m
abov
ve US$ 230--240K
leve
els yet. How
wever, if th
he position keeps ge
etting
chip
pped away a
and the LRs stay strong,, we can ex pect
the firming
f
trend
d to continue
e.
Me
editerran
nean_____________
____________
A busier end to
o the week in the Mediterranean for
f Xd and Black
k Sea trade s, which ha
as seen muc
ch of
Med
the prompt ton
nnage fixed
d away. Frid
day's positio
on list
w looks tighter over the
e next 7 day
ys and altho
ough
now
last done rema
ains 30 x wss 115-117.5, we could easily
e
ally if the ship
ps still
see owners sharrpen their ide
eas especia
on subjects are
a
confirm
med. There has been
n an
improvement for MR prosspects with a reductio
on in
age due in
n part to a busier UK Cont
C
available tonna
marrket and alsso a numbe
er fixing 30k
kt stems. We
e are
freig
ghting Med
diterranean loads fo
or transatla
antic
disc
charge 37 x ws
w 92.5 – stilll a slight disc
count vs the
e TC2
marrket, whilst for West Africa it is untested but
considered 37 x ws 107.5. For East of Suez we exxpect
els around US$
U 700-725kk for Red Se
ea (basis ce
entral
leve
Med
d load) and around a USS$ 100k more
e for the AG
G.
UK Contine
ent_______________
___________
The Continent has enjoyed
d a steady stream of fixing
f
throughout the week, and the TC2 suittable vesselss are
tight up to mid-month, curre
rently calling
g the markett 37 x
wners now pushing fo
or ws 100 plus.
ws 95 with ow
nt/West Afric
ca enquiry has not been
b
particu
ularly
Con
busy
y, but what fixing we d
did see was around 37 x ws
107..5-110 level. Handies X-C
Cont have suffered
s
a slo
ower
wee
ek, and 30
0 x ws 1300 is curren
ntly on sub
bjects
Baltiic/Cont (a slip of ws 5 points). Fle
exi's similarly
y are
strug
ggling, trad
ding 22 x ws 160-162
2.5. LR1's have
h
remained tight for the du ration, but with this co
omes
k of activity
y, 60 x ws 1105 Cont/W
West Africa. LR2's
lack
currrently thin alsso and US$ 22.8-2.9m UKC
C/Japan.
Ca
aribbean
n_________________
___________
A more
m
active end to the week in the USG prov
vided
som
me relief for owners,
o
puttting a stop to
t the recen
nt rot
as TC14 rates bottomed at 38 x ws 87.5 mid week
k and
have now startted to firm again. Desspite a relattively
g list for prom
mpt vessels, tonnage is tighter afte
er the
long
15th
h and if the
e current ac
ctivity is susstained then
n we
could see upw
ward pressure
re on rates for last dec
cade
AC reacts accordingly
ms. Caribs up to the USA
a
and
stem
hold
ds at ws 100,, while short haul runs ha
ave been active
this week
w
fixing around the US$250k for EC Mexico.
DIRTY
Y PRODUCTS
Handy______________________
_________
__
MR
R________
_________
_________
__________
In th
nder
he Contine
ent we found on Mon
nday a slen
tonn
nage list, w
with the bulk
k sitting at the top. Ass we
prog
gressed th
hrough the
e week, cargoes h
have
clipp
ped away many vessels, and turning into the
end
d of the wee
ek, finding a vessel before mid-m onth
will have to inv
volve the MRs now. 30 x ws 160 se
eems
firmlly on the radar and
d moving in
nto next w
week
expects ownerrs to try and
d build off th
his. The num
mber
of frresh stems w
we see nexxt week will be the cattalyst
to th
his market.
Panamax__________________
__________
If th
here was ta
alk of the summer do
oldrums on the
horizzon last wee
ek, then ow
wners can be
b happy w here
they
y have ende
ed today with
w rates shiifting very litttle.
The Mediterra
anean hass manage
ed to em
mploy
eno
ough to kee
ep the marrket fairly fla
at, with ce
ertain
carg
goes pickin
ng up the usual prem
miums to sskew
rate
es appropria
ately. MRs dominate the lists a gain
and
d also similarrly to the Co
ontinent, ex
xpect to see
e the
fresh
h tonnage a
appearing open
o
on miid-month da
ates.
On Monday alll eyes will be
b on tonna
age lists to ssee if
the re-emerge
ence of fixe
ed vessels and
a
where
e the
stren
ngths in the
e Mediterra
anean will occur,
o
for b
both
own
ners and charterers.
Afte
er a couple
e of quiet w
weeks on th
he full sized
d MR
stem
ms, we have
e been sho
own the true
e colours of this
secttor. Cargoe
es have b een comp
petitively fought
ove
er which ha
as chiselled away at last done ra
ates.
Push
hing into Week
W
33, we
e find the MRs
M domina
ating
tonn
nage lists, and
a
expectt certain 30
0-5kt cargoe
es to
startt tempting owners.
o
We have finally
y seen some
e activity in
n the sectorr, but
despite this, the Contin
nent and Mediterran
nean
aged to re
emove ce
ertain
marrkets has only mana
tonn
nage place
ed at the to
op of our listss. Correctio
on on
rate
es was inev
vitable whe
en we starte
ed on Mon
nday
with
h three PPT vessels in the ARA area and ass we
reac
ch Friday th
here are rep
ports of 55 x ws 120 on subs
in th
he UK Cont.
A sim
milar story for our Ame
erican cousiins can be seen
s
with
h the slow start to the w
week along
gside a grow
wing
tonn
nage list. Rates have been on a slippery slope
s
and
d as we dra
aw to the e
end of the week nega
ative
corrrection of 30-40
3
pointss has occurrred. With th
his in
mind and a number of vvessels opening up on
n the
AC, unlike recent
r
wee
eks, could well make the
USA
com
mmitment of the ballastt for a cargo.
Dirty Tanker Spot Market Developments - Spot Worldscale
wk on wk
August
Last
Last
FFA
change
Week
47
Month
48
Q4 14
53
AG-Japan
TD3 VLCC
TD5 Suezmax WAF-USAC
-4
7th
43
-6
72
78
85
78
TD7 Aframax N.Sea-UKC
+23
120
97
102
113
Dirty Tanker Spot Market Developments - $/day tce (a)
wk on wk
August
Last
Last
FFA
change
Week
24,500
Month
26,000
Q4 14
32,000
AG-Japan
TD3 VLCC
TD5 Suezmax WAF-USAC
-5,500
7th
19,000
-3,500
23,250
26,750
30,750
27,250
TD7 Aframax N.Sea-UKC
+17,000
31,250
14,250
16,750
25,750
Clean Tanker Spot Market Developments - Spot Worldscale
wk on wk
August
Last
Last
FFA
change
Week
115
Month
80
Q4 14
AG-Japan
TC1 LR2
TC2 MR - w est UKC-USAC
+0
7th
115
-0
94
94
90
101
AG-Japan
TC5 LR1
TC7 MR - east Singapore-EC Aus
+6
123
117
98
108
+0
172
172
170
Clean Tanker Spot Market Developments - $/day tce (a)
AG-Japan
TC1 LR2
TC2 MR - w est UKC-USAC
AG-Japan
TC5 LR1
TC7 MR - east Singapore-EC Aus
wk on wk
August
Last
Last
FFA
change
Week
23,000
Month
9,000
Q4 14
+250
7th
23,250
+0
3,000
3,000
2,000
4,500
+1,750
17,000
15,250
10,000
12,750
+250
12,750
12,500
12,000
(a) based on round voyage economics at 'market' speed (13 knots laden/12 knots ballast)
LQM Bunker Price (Rotterdam HSFO 380)
-4
568.5
572.5
583.5
LQM Bunker Price (Fujairah 380 HSFO)
-3
610
612.5
607.5
LQM Bunker Price (Singapore 380 HSFO)
-10
587.5
597
601
RNM/JH/TP/JT/slk
Produced by Gibson Consultancy and Research
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