Trading houses have been busy fixing product tankers and VLCC newbuildings on period charters as opportunities for contango plays emerge in Europe.
Brokers reported that Glencore subsidiary ST Shipping and Transport has booked the Odfjell-owned, Hafnia-managed 81,300-dwt Bow Pioneer (built 2013) at $17,500 per day on a three-month storage charter.
The deal can be extended by another three months at $18,500 per day.
Meanwhile, Trafigura is said to have taken Scorpio Tankers’ 50,000-dwt STI Pontiac (built 2015) for three months at $16,500 per day for the same purpose.
Brokers also report that Lukoil's Litasco has fixed the 73,700-dwt Torm Venture (built 2007) for two months at $17,500 per day plus a two-month option at $18,500 per day.
While the deal was understood to have not materialised, Torm spokesman Joakim Norholm Vasehus said the Danish tanker operator has seen more enquiries for floating storage of clean petroleum products lately.
“Naturally, a further increase in floating storage will tie up tonnage and provide support to the freight environment in the product tanker segment,” Vasehus said.
Separately, Gunvor subsidiary Clearlake Shipping is said to have chartered Navios Maritime Acquisition’s 310,000-dwt Baghdad (built 2020) for six to nine months at $42,000 per day.
TradeWinds earlier reported that Trafigura was behind six-month charters for Evalend Shipping’s 300,000-dwt Halcyon at $40,000 per day and Thenamaris’ 300,200-dwt Seavoice (both built 2020) at $42,000 per day.
When delivered later this year, the VLCC newbuildings are speculated to load gasoil on their maiden voyages to Europe, where they may be used as floating storage.
“A few more vessels [are] due to come out of yards for the remaining months of 2020, meaning there are certainly opportunities for more gasoil business to be done here,” shipbroker Braemar ACM said in a note.
Oil dynamics in Europe
The contango in gasoil where the futures price is higher than the spot levels has widened in Europe recently as a second wave of coronavirus hits regional oil consumption, providing traders with more opportunities for storage play.
The International Energy Agency has forecast European oil demand to reach 13.9m barrels per day (bpd) in the fourth quarter, down by 1m bpd from the same period last year.
“Clean product floating storage is not dropping, remaining elevated particularly off Northwest Europe,” ClipperData’s commodity research director Matt Smith said.
The amount of clean products stored at sea globally has stabilised at about 40m barrels in recent weeks, having hit a record high of 78.7m barrels in mid-May, Kpler data shows.
But some market players suggested that charter rates in some segments remain too high for contango play and that the actual number of vessels entering floating storage could be limited.
“Storage works for [newbuilding] VLCCs, but not for LR2s,” a broker said.
“There are not many opportunities for contango play. The recent storage enquiry from charterers could be more about inventory management,” a tanker owner said.
Among recent reported fixtures, ST Shipping secured one-year charters for the 110,000-dwt FPMC P Ideal (built 2012) at between $20,000 and $21,000 per day and the 109,000-dwt BW Despina (built 2019) at $21,500 per day. Both are believed not to be linked to storage use.
Gunvor, Trafigura and Glencore declined to comment on the charters. TradeWinds has approached Hafnia, Scorpio Tankers and Navios Maritime Acquisition for comment.
