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Fri 08-Jan-16

Fri 05-Feb-16

Fri 04-Mar-16

Fri 01-Apr-16

Fri 29-Apr-16
VLCC-TCE

Fri 27-May-16

Fri 24-Jun-16
Suezmax-TCE

Fri 22-Jul-16

Fri 19-Aug-16

Fri 16-Sep-16
Aframax-TCE

Fri 14-Oct-16

Fri 11-Nov-16
• More orders will occur in addition to the current known orderbook
• The base case results in the following deliveries before slippage

Size 2016 2017 2018 2019 2020 2021

VLCC 51 50 40 25 25 54

Suezmax 40 63 20 20 20 35

Aframax 72 71 60 40 30 54

• 20% of newbuilding orders slip by a quarter from scheduled delivery date

• Fleet is employable up to 22 years on average; older ships are scrapped over 5 years
• Slow steaming applies throughout, effectively reducing supply by 10%
• Demand grows at long-term (2001-2015 average), =
• No large scale wars, stock market crashes or other black swans.

• Global oil demand grows by 1.3 Mn bpd in 2016, 1.2 Mn bpd in 2017, and by 1 Mn bpd
each year to 2021.

• 4 Mn bpd of new oil supply is delivered mostly from Mid East

North America: 0.5 Mn bpd
Middle East: 3.5 Mn bpd
Russia: 0.5 Mn bpd

• Benchmark Brent prices remain in the USD 40 to USD 80 per barrel range.

• No change to global taxation regimes to the detriment of oil demand.

• Transport demand for petroleum products grows by 2 per cent annually, driven primarily
by the Chinese and Indian markets, but industrial demand grows by 3 per cent per
annum, roughly in line with global GDP.
• No large scale wars, stock market crashes or other black swans.

• But now we have several factors that are difficult to judge

•
•
•
•
• The good news is twofold: likely to be pro-business, and shipping has a direct line via Wilbur Ross
• Mr Ross gave some hints to the FT about economic policy:
• Encourage infrastructure investment
• Repatriation of US corporate profits from overseas tax havens
• Tax breaks for capital expenditure
• We also know about:
• Repeal clean energy act, lift restrictions on production of oil, gas and coal
• Bring forward energy infrastructure e.g. Keystone pipeline

• The bad news is twofold: limited policy experience in the team, and no diplomatic experience, so
foreign policy may undermine economic policy
• Renegotiate or withdraw from NAFTA & TPP
• Bilateralism and transactionalism will take over from multilateralism and partnerships: Welcome to the 1970s

• Mr Ross also told the FT

• US will see itself as world’s biggest customer “and treat nations that are selling to us as suppliers to us” –
• Trade agreements to be reopened after five years
• Partners to be required to implement required changes to laws and other policies at same time as US
• Paris meeting (COP21) led to 197 country agreement to limited global temperature rise to 1.5 Celcius
• Rise of renewables now appears unstoppable for electricity generation if not for transport, but
possibly three upcoming Co2 regs – IMO, EU and COP22.
• Marrakech meeting 7-18 Nov 2016 (COP22) has an elephant not in the room – the US.

• From 01 Jan 2020 you have three options: fit scrubbers, burn compliant fuel, cease trading
• Other fuels: LNG / Residue thickened distillate / vacuum gasoil / desulphurised IFO / hydrocracker
bottoms - but how to understand and monitor spec? What works in which engines?
• How to police it? How to ensure fuel availability? Unlike Tier III and BWMS, no “carriage requirement”

• Ratified 08 Sep 2016, enters force 08 Sep 2017 with 7 years for implementation
• Must be USCG approved, but so far no system is
• Shipyards in dark – will contracting and fleet renewal be affected?
• No large scale wars, stock market crashes or other black swans.

• Global oil demand grows by 1.3 Mn bpd in 2016, 1.2 Mn bpd in 2017, and by 1 Mn bpd
each year to 2021.

• 4 Mn bpd of new oil supply is delivered mostly from Mid East

North America: 0.5 Mn bpd
Middle East: 3.5 Mn bpd
Russia: 0.5 Mn bpd

• Benchmark Brent prices remain in the USD 40 to USD 80 per barrel range.

• No change to global taxation regimes to the detriment of oil demand.

• Transport demand for petroleum products grows by 2 per cent annually, driven primarily
by the Chinese and Indian markets, but industrial demand grows by 3 per cent per
annum, roughly in line with global GDP.
The main reason that 2015 was a great year for ship owners
in the crude oil freight markets was that demand grew by 9%
overall while fleet growth had been barely above zero for
three years.
That situation has flipped again in 2016, with FY 16 demand
growth expected to fall to 2.6% while supply increases by
3.4%. For 2017, our base case suggests that demand will
essentially be flat, held down mostly by weaker Aframax
demand (due to cannibalisation by LR2 fleet) while the fleet
will grow by 6%
• Our base case is that the fleet will have an average
economic life of 22 years, that slow steaming is a fixture
now, and that about one-fifth of orders each year “slip”
into the next year.
• On this basis, demand will have to grow at the long-term
average (2001-2014) for the next five years if the freight
market is to give owners a reasonable return. Should
demand grow at e.g. the low levels of 2009-2014, then
oversupply will increase.
Average crude oil tanker freight rates outperformed improvement to the forecast horizon. The effect of
our Base Case in 2015, whereas 2016 freight rates that would presumably be two fold – faster sailing
have underperformed our Base Case. The Base Case speeds and more newbuilding contracting
suggests a slightly weaker 2017 but then steady
Base case forecast for 2016 was for a fall from 15.5 Mn Dwt of new VLCC supply delivering during
about 89 per cent utilisation last year to just 80 per the year, taking into account expected slippage and
cent this year. This is in spite of an about 6 Mn one (older) vessel only being sold for demolition this
required Dwt increase in demand and due to the year.
Suezmax utilisation peaked at 89 per cent in 2015. outages from Nigeria and Vs cannibalising Suezmax
Our base case was for a fall to just 88 per cent this trades, an effect our model does not (yet) capture. It
year but freight rates (dark blue solid line) have fallen may be that the decline in utilisation we were
much faster than we expected. This is due to predicting hits earlier and harder than we expected.
Aframax is harder to model as it affected by the demand in 2016 is for a big fall which represents
availability of LR2 ships, and Aframax earnings are LR2 ships moving into the dirty Aframax trades
just as affected by weak LR2 earnings as they are by
their own fundamentals. Our model estimate for
Earnings have considerably underperformed
forecasts this year, due in no small part to the
interference of the LR2s in the dirty trades.
Market may face weakness in 2017 and 2018 but
nothing like the downturn faced in the period 2010-
2014.
VLCC: Since the beginning of the year, the average speed of laden
vessels has remained above 12.5 knots, reaching its highest levels in
May. However, we now don’t expect to see the 13-knot limit surpassed
in the near future, with September’s speed having moved close to 12.6
knots.
Suezmax: The dynamically increased average speed of laden vessels
between April and June did not prove to last for long, as the average
speed has been declining last month. It will be interesting to see if the
segment could move even closer to 12 knots shortly.
Aframax/LR2: After moving close to the speed of all and unladen
vessels, the average speed of laden Aframaxes increased till May,
resulting in the obvious difference on the chart. Seasonality is the main
reason, as the same phenomenon took place in both 2014 and 2015.
However, speed of laden vessels has been slowing down so far since
June, without following seasonality’s path.
Panamax/LR1: After moving significantly higher than the last two years’
levels, the average speed of laden vessels approached last year’s levels
in September, after decreasing dynamically. 2016-May’s levels have
been the highest level reached since, at least, early 2014. We expect
October moving further lower.
MR: Similarly to previous size band, last month’s average speed of
laden vessels has been moving near 12.6, after reaching a peak in May
since, at least, early 2014. Seasonality hasn’t been followed from July to
September, as the speed was expected to further increase during these
months.
Sources: IEA, Affinity Research
• The glut of crude oil is primarily
responsible for prices sinking as low as
they have.

• Saudi Arabia and, by extension, Opec

increased production in the face of the
threat posed by US shale producers with
the aim of forcing high-cost producers
out of the market.

• Although the market is predicted to

come close to balancing towards the
end of 2016, the substantial overhang of
both crude oil and refined products is
expected to keep prices low for the
foreseeable future.

• Brent crude broke through the USD 50

per barrel ceiling following Opec’s
announcement that it plans to cut
production, but a lack of credibility has
undermined the price.
• The IEA estimates that demand will have increased by
an annual 1.3 Mn bpd by the end of 2016, before
growing by 1.2 Mn bpd in 2017.

• China, India, and the US have been the largest drivers

behind the increase in demand, while the low prices
continue to provide incentive for storage.

• There had been concerns that China’s Strategic

Petroleum Reserves were approaching full capacity,
but these have been, at least temporarily, allayed.

• The IEA forecasts that global oil demand growth will

slow in 2017, registering just 1.2 Mn bpd.

• Demand in Q3 and Q4 2017 is forecasted to reach 98

Mn bpd.

• As we expect increased seasonal demand for crude

oil into the winter months, we anticipate crude tanker
freight rates to strengthen towards year-end and
could see earnings reach the record highs seen this
spring.
Global Oil Production • An oversupply of crude oil has been cited as
100 the reason for the current low oil price
environment.
90

80 • Supply side disruptions, notably in Canada,

West Africa, and the Middle East, have nudged
70
the market towards balance, but the likes of
60 Saudi Arabia and Russia continue to produce
Mn bpd

50 crude oil at near-record rates.

40 • Opec has announced its intention to cut
30 output, but quotas have yet to be agreed, and
20
won’t be until the formal meeting at the end of
November. Nevertheless, we don’t expect
10
output to be much affected, if at all.
-
• The recent modest recovery in prices has also
led some to fear that the US shale industry will
Rest of the World (Source: Affinity Estimate)
begin to increase production back to levels
Russia (Source: IEA, Affinity Estimate) around the 9 – 9.5 Mn bpd mark.
US (Source: EIA, IEA)
OPEC (Source: IEA, Affinity Estimate)
 • In this scenario, OPEC manages to cut supply
by about 1.3 Mn bpd and US supply falls by a
99
nominal 0.02 Mn bpd. The consequence is a
98 small reduction in oil supply in 2017, while
demand growth follows its fairly regular
97
pattern.
96
• The consequence would be rising prices, a
Mn bpd

95 drawdown in inventories, an increase in

94
inflationary pressures, potentially fiscal and
policy responses in the US and China and an
93 increase in
92

91
Global Oil Demand Global Oil Supply

90
Most new refining capacity is based in the Middle East, China, and India, while
any new production will likely come from the likes of Saudi Arabia, Iran, Iraq,
Libya, and Nigeria. As a result, there is likely to be little increase in tonne-mile
demand.
• The growth of Chinese oil demand has been
significant in both the oil and tanker markets. In
the first half of 2016, Chinese imports averaged
7.5 Mn bpd, which suggests stockpiling.
• China plans to create reserves equal to 90 days’
worth of consumption, which would total 900 Mn
barrels or more based on recent consumption
data. If China based its reserves on import
requirements, then its own 4.0 Mn bpd (and
declining) of crude oil production could be
deducted from the total.
• In September 2016, Beijing reported that it had
added 43 Mn barrels to its SPR between mid-
2015 and the beginning of 2016, totalling around
234 Mn barrels.
• However, new satellite data suggest that China’s
overground strategic and commercial petroleum
reserve tanks held around 600 Mn barrels of oil as
of May 2016.
• Estimates vary, but one can expect China to grow
its strategic reserves by around 50 Mn barrels per
year, equivalent to one VLCC shipment per
fortnight. It is estimated that China’s overall
storage is around 60 per cent full at the moment.
• There are reports that storage equalling around
38 days’ worth of current imports will be
constructed over the next four years until 2020.
Source: JODI
Source: Thomson Reuters Eikon
Comparing the first nine months of the year, VLCC contracting is down by 70 per cent (46/11); Suezmax by 76 per
cent (45/11); and Aframax by 74 per cent (42/11).
 Fleet Orderbook 2016 YTD 2016 2017 2018 2019
On Order as %
of which ordered of exist. fleet
(Mn Dwt) (No. of Ships) (Mn Dwt) (No. of Ships) (No. of Vessels)
before 2013
Handysize 19.7 542 1.1 31 2 20 4 16 6 4 5.7%
Medium Range 68.5 1436 7.4 151 8 82 26 66 29 20 10.8%
Panamax / LR1 31.1 430 4.6 63 6 18 11 35 11 4 14.7%
of which LR1: 27.0 371 3.7 51 5 17 8 30 7 4 13.8%
Aframax / LR2 104.6 966 16.9 149 6 45 26 72 41 6 16.1%
of which LR2: 49.5 456 6.9 61 4 31 19 35 6 0 14%
Suezmax 79.5 509 16.9 107 5 22 14 67 26 0 21.2%
VLCC 211.1 686 28.9 94 1 39 15 45 29 5 13.7%
Grand Total 514.5 4,569 75.7 595 28 226 96 301 142 39 14.72%

New Contracts Demolition

2015 2016 2015
May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Sold for Scrap 2016 YTD
YTD YTD YTD
Handysize 0 0 0 0 0 0 3 3 0 6 7
Medium Range 0 2 2 6 1 1 48 20 0 5 11
Panamax / LR1 0 2 0 0 0 2 31 6 1 10 1
of which LR1: 0 2 0 0 0 2 23 6 0 2 1
Aframax / LR2 0 2 0 3 2 4 73 18 3 4 8
of which LR2: 0 0 0 3 0 1 24 4 1 0 1
Suezmax 2 0 0 1 0 8 50 19 0 0 0
VLCC 0 2 0 5 2 0 44 14 1 1 1
Grand Total 2 8 2 15 5 15 249 80 5 26 28
Y-O-Y% Y-O-Y%
-68% 8%
change change
 Total Fleet

No. No. No. No. No. No. No. No. No.

Mn Dwt Mn Dwt Mn Dwt Mn Dwt Mn Dwt Mn Dwt Mn Dwt Mn Dwt Mn Dwt No. Ships
Ships Ships Ships Ships Ships Ships Ships Ships Ships
Handysize 31 1.1 2 0.1 80 2.9 147 5.4 170 6.2 92 3.2 36 1.3 17 0.6 542 19.7 11.86%

as % of total fleet 6% 0% 15% 27% 31% 17% 7% 3%

Medium Range 151 7.4 8 0.4 382 18.8 527 25.5 337 15.5 100 4.6 67 3.0 23 1.0 1436 68.4 31.43%

as % of total fleet 11% 1% 27% 37% 23% 7% 5% 2%

Panamax / LR1 63 4.6 6 0.4 50 3.7 184 13.5 156 11.2 27 1.9 7 0.4 6 0.4 430 31.1 9.41%

of which LR1: 51 3.7 5 0.4 48 3.5 179 13.2 117 8.4 19 1.4 4 0.3 4 0.3

as % of total fleet 15% 1% 12% 43% 36% 6% 2% 1%

Aframax / LR2 88 10.0 2 0.2 160 17.7 348 38.3 279 30.1 126 13.3 40 3.9 13 1.2 966 104.6 21.14%

of which LR2: 61 6.9 4 0.4 111 12.3 178 19.6 72 7.8 67 7.0 20 2.0 8 0.8

as % of total fleet 9% 0% 17% 36% 29% 13% 4% 1%

Suezmax 107 16.9 5 0.8 112 17.6 164 25.9 125 19.8 81 12.3 23 3.4 4 0.6 509 79.5 11.14%

as % of total fleet 21% 1% 22% 32% 25% 16% 5% 0.8%

VLCC 94 28.9 1 0.3 162 50.6 243 75.1 151 46.4 105 31.5 25 7.4 0 0.0 686 211.1 15.01%

as % of total fleet 14% 0.1% 24% 35% 22% 15% 4% 0%

Grand Total 534 68.8 24 2.2 946 111.3 1613 183.8 1218 129.2 531 66.9 198 19.5 63 3.9 4569 514.5

% of Total Fleet 11.7% 13.4% 0.5% 0.4% 20.7% 21.6% 35.3% 35.7% 26.7% 25.1% 11.6% 13.0% 4.3% 3.8% 1.4% 0.8%
 Fleet, Orderbook and Under Construction
→ The tanker orderbook totals 595
vessels.
50
40 → There are 261 vessels over 20 years
30 old.
Mn Dwt

20
10 → The average age of the fleet is 9.3
0 years. During the year so far,
1990

1994
1996
1998

2002
2004
2006

2010
2012

2016
2018
2020
1992

2000

2008

2014
demolished vessels have averaged
25.5 years.
Fleet Orderbook Under Construction
→ As of early November 2016, the
Additions Removals %Change cumulative fleet totalled 514.5 Mn
Dwt. As indicated by the decreased
50 25% year-on-year percentage change of
40 20%
30 15%
the fleet, the growth of the tanker fleet
20 10% slightly increased during the last year.
Mn Dwt

10 5%
0 0%
-10 -5%
-20 -10%
-30 2016 YTD -15%
1960

1964

1976

1980

1992

1996

2004

2008

2012
1968

1972

1984

1988

2000
 → The first graph is divided into ships under
Fleet, Orderbook and Under Construction
construction and orders for which steel
25 cutting has not yet begun. All 15 VLCCs to
20 be delivered in 2016 are under construction,
15 while 31 are currently under construction for
Mn Dwt

10 delivery next year.

5
0 → The second graph shows the fleet
1993

1995
1996
1997
1998

2000
2001
2002
2003

2005
2006
2007
2008

2010
2011
2012
2013

2015
2016
2017
2018
1994

1999

2004

2009

2014
development with average YoY percentage
change for vessels over 200,000 Dwt.
Fleet Additions On Order Under Construction → The current fleet consists of 686 vessels, with
a total capacity of 211.07 Mn Dwt.
Additions Removals %Change → The VLCC segment is the youngest in the
25 25% tanker sector, with an average age of 8.8
20 20% years.
15 15% → The orderbook is currently 13.7 per cent of
10 10%
Mn Dwt

5 5% the existing fleet, totalling 94 vessels or 28.9

0 0% Mn Dwt.
-5 -5%
-10 -10% → On average, a VLCC was demolished after
-15 -15% 24.5 years in 2015.
2016 YTD
1993

1996
1997
1998

2000
2001
2002
2003

2005
2006
2007

2010
2011
2012

2014
2015
1994
1995

1999

2004

2008
2009

2013

→ There are 25 vessels (totalling 7.4 Mn Dwt) in

the VLCC fleet older than 20 years old.
 → A substantial orderbook for 2016 and 2017
Fleet, Orderbook and Under Construction
suggests renewed interest in this segment
15 after several years of weak trading. The
orderbook is currently 21.2 per cent of the
10
existing fleet, totalling 107 vessels or 16.9
Mn Dwt

5 Mn Dwt.
→ The current fleet consists of 509 vessels, with
0 a total capacity of 79.54 Mn Dwt.
1993

1995

1997

2003

2005

2007

2009

2013

2015

2017
1991

1999

2001

2011
→ The Suezmax fleet has an average age of 9.5
Fleet On Order Under Construction years.

Additions Removals %Change

→ On average, a Suezmax was demolished
8 20% after 20.6 years in 2014. There were no
6 15% demolitions in 2015.
4 10% →
Mn Dwt

There are 27 vessels (totalling 3.98 Mn Dwt)

2 5% in the Suezmax fleet older than 20 years old.
0 0%
-2 -5%
→ 1 Suezmax to be delivered in 2016 is not yet
-4 -10%
under construction, while 13 are expected to
2016 YTD
1964

1968

1980

1984

1992

1996

2000

2008

2012
1960

1972

1976

1988

2004

be completed by the end of the year, and 50

are currently under construction for delivery
next year.
 → Approximately 47 per cent of the fleet is
Fleet, Orderbook and Under Construction
coated and the older vessels are trading
12 mainly crude or fuel oil.
10
8
Mn Dwt

6 → The fleet consists of 966 vessels, with a total

4 capacity of 104.62 Mn Dwt.
2
0
1990

1992

1994

1998

2000

2004

2006

2008

2012

2014

2018
1996

2002

2010

2016
→ The Aframax/LR2 fleet has an average age of
9.8 years.
Fleet On Order Under Construction → The orderbook is currently 16.1 per cent of
the existing fleet, totalling 149 vessels or
Additions Removals %Change 16.9 Mn Dwt.
12 30% → On average, an Aframax was demolished
10 25% after 22.8 years in 2015, while an LR2 was
8 20%
6 15% demolished after 23.3 years.
Mn Dwt

4 10%
2 5% → There are 53 vessels (totalling 5.18 Mn Dwt)
0 0% in the Aframax/LR2 fleet older than 20 years.
-2 -5%
-4 -10%
-6 -15% → All 26 Aframax/LR2 to be delivered in 2016
2016 YTD
1960

1968

1976

1984

1988

1992

1996

2000

2004

2012
1964

1972

1980

2008

are under construction, while 58 are currently

under construction for delivery next year.
 → The fleet consists of 430 vessels, with a total
Fleet, Orderbook and Under Construction
capacity of 31.11 Mn Dwt.
4
3 → The Panamax/LR1 fleet has an average age
Mn Dwt

2 of 9.3 years.

1 → The orderbook is currently 14.7 per cent of

the existing fleet, totalling 63 vessels or 4.6
0 Mn Dwt.
1990

1992

1994

1996

2000

2002

2004

2006

2010

2012

2014

2016
1998

2008

2018
→ On average, a Panamax was demolished
after 24.9 years in 2015, while an LR1 was
Fleet On Order Under Construction demolished after 17.7 years.

Additions Removals %Change

→ There are 13 vessels (totalling 0.82 Mn Dwt)
6 30% in the Panamax/LR1 fleet older than 20 years
old.
4 20%
2 10% → 2 Panamaxes/LR1s to be delivered in 2016
Mn Dwt

are not yet under construction, while 9 are

0 0% expected to be completed by the end of the
year, and 19 are currently under construction
-2 -10%
for delivery next year.
-4 -20%
2016 YTD
1964

1968

1980

1984

1992

1996

2000

2008

2012
1960

1972

1976

1988

2004

→ As indicated by the decreased YoY

percentage change of the fleet, the growth of
the Panamax/LR1 sector had slowed down
significantly until last year.
 → The fleet consists of 1436 vessels, with a
Fleet, Orderbook and Under Construction
total capacity of 68.47 Mn Dwt.
8
6 → The Medium Range fleet has an average age
Mn Dwt

4 of 8.5 years.

2 → The orderbook is currently 10.8 per cent of

the existing fleet, totalling 151 vessels or 7.4
0 Mn Dwt.
1990

1992

1996

1998

2000

2002

2006

2008

2010

2012

2016

2018

2020
1994

2004

2014
→ On average, a MR was demolished after 27
years in 2015.
Fleet On Order Under Construction

→ There are 90 vessels (totalling 4.04 Mn Dwt)

Additions Removals %Change
in the MR fleet older than 20 years.
8 40%
6 30%
→ All of the remaining 26 MRs scheduled to be
4 20%
Mn Dwt

delivered this year are under construction and

2 10% are expected to be completed by the end of
0 0% the year, while 62 are currently under
-2 -10% construction to be delivered next year.
-4 -20% → As indicated by the decreased YoY
2016 YTD
1964

1968

1980

1984

1992

1996

2000

2008

2012
1960

1972

1976

1988

2004

percentage change of the fleet, the growth of

the MR sector is slowing down, although
oversupply remains a problem.
 Fleet, Orderbook and Under Construction
→ The fleet consists of 542 vessels, with
a total capacity of 19.7 Mn Dwt.
2.0
1.5
→ The Handysize fleet has an average
age of 11.1 years.
Mn Dwt

1.0
0.5
→ The orderbook is currently 5.7 per
cent of the existing fleet, totalling 31
0.0 vessels or 1.1 Mn Dwt.
1990

1992

1996

1998

2002

2004

2006

2008

2010

2012

2016

2018
1994

2000

2014
→ On average, a Handysize was
demolished after 25.9 years in 2015.
Fleet On Order Under Construction

Additions Removals %Change → There are 53 vessels (totalling 1.91

Mn Dwt) in the Handysize fleet older
2.0 10.0%
1.5 7.5% than 20 years old. Just under half of
1.0 5.0% these vessels are over 25 years.
0.5 2.5%
Mn Dwt

0.0 0.0% → All of the remaining 7 Handysizes

-0.5 -2.5% scheduled to be delivered this year
-1.0 -5.0%
-1.5 -7.5% are under construction and are
-2.0 -10.0% expected to be completed by the end
-2.5 -12.5% of the year, while 14 are currently
2016 YTD
1960

1964

1972

1980

1984

1992

1996

2000

2004

2012
1968

1976

1988

2008

under construction for delivery next

year.
 Count Charterer No. Fixtures Count Charterer Ctry No. Fixtures share
1 UNIPEC 204 24.8% 1 CHR 292 37.4%
2 IOC 54 6.6% 2 IND 119 15.2%
3 Day Harvest 43 5.2% 3 USA 63 8.1%
4 CNR 41 5.0% 4 KRS 61 7.8%
5 Reliance 35 4.2% 5 GBI 57 7.3%
6 SAU 32 4.1%
6 Bahri 32 3.9%
7 SWZ 30 3.8%
7 Shell 28 3.4%
8 CHT 22 2.8%
8 PetroChina 20 2.4%
9 JPN 20 2.6%
9 SeaRiver 20 2.4%
10 BRZ 18 2.3%
10 CSSA 19 2.3% 11 SNG 13 1.7%
11 Petrobras 18 2.2% 12 THA 9 1.2%
12 GS Caltex 17 2.1% 13 NOR 8 1.0%
13 S-Oil 15 1.8% 14 AZE 7 0.9%
14 CPC 14 1.7% 15 CAN 6 0.8%
15 Vitol 14 1.7% 16 HKG 6 0.8%
16 Essar 12 1.5% 17 NTH 6 0.8%
17 SK Energy 12 1.5% 18 SAF 4 0.5%
18 Valero 11 1.3% 19 KUW 3 0.4%
19 Glasford 10 1.2% 20 ITL 2 0.3%
20 BPCL 9 1.1% 21 BVI 1 0.1%
21 Hyundai Oil Bank 9 1.1% 22 MAL 1 0.1%
23 UAE 1 0.1%
Top 20 VLCC charterers represent 76% of all VLCC
fixtures year to date Top 20 VLCC charterers aggregated by country
represent 99% of all VLCC fixtures year to date.
Top 23 is 100%.
Excluding 2016 YTD, basis monthly freight market
averages since January 2008, a clear seasonal
pattern is apparent, with a strong January giving
way to a relatively weak February (probably due to
Lunar New Year), a firm March, and a weaker April
(likely due to Asian refinery maintenance season).
Asian refinery restocking and pre-US driving
season ramp-up sees a strong May-June, with a
summer lull in July and August followed by the
traditional Q4 spike as refiners switch to
producing Northern Hemisphere winter products.

VLCC earnings this year have so far defied historic

seasonal trends. A very strong January, riding off
the highs in late 2015, was followed by a sharper
than usual decline in February. After a slight
recovery in March, earnings then embarked on a
six-month decline, before registering a return to
seasonal norms in October. Our model predicts
that this uptick will not last, owing to the number
of vessels expected to enter the fleet.
Basis monthly time charter market
averages since January 2008, as with the
freight market, a clear seasonal pattern is
apparent, with a strong January giving way
to a relatively weak February, a flat March
and April preceding a June spike,
correlating with the freight markets.
The weaker freight market in July and
August is reflected by the time charter
market, but the TC market tends to
bottom out in October/November.
This gives charterers an opportunity to
see how rapid the seasonal Q4 upshift in
freight markets is before adding to any
tonnage identified in the weaker Q3.
Traders may prefer shorter period with
options, but those seeking to cover
system cargoes might take advantage of
owners willing to go out to three years.
The 1-year TC rate has slumped to around the same
level as the 3- and 5-year TC rates for all three
sizebands.

This indicates short-term pessimism for owners, but at

the same time charterers can expect cheap freight in
the short-term.
 USD Mn
USD Mn

20
30
40
60
70
80
90

50
100
110
VLCC

20
30
35
40
45
50
55
60

25
31-Jan-15
31-Jan-15

NB
30-Apr-15

NB
30-Apr-15

31-Jul-15
31-Jul-15
Resale

Resale
31-Oct-15
31-Oct-15

31-Jan-16
5 YO

31-Jan-16

5 YO
30-Apr-16
30-Apr-16
10 YO

31-Jul-16

10 YO
Aframax
31-Jul-16

31-Oct-16
31-Oct-16

USD Mn
20
30
50
60
70
80

40

31-Jan-15
Suezmax

30-Apr-15
NB

31-Jul-15
Resale

31-Oct-15

31-Jan-16
5 YO

USD 70 Mn range in China.

30-Apr-16
10 YO

31-Jul-16
Shipyards are offering very low prices low
USD 80 Mn range for VLCCs in Korea, low

31-Oct-16
 Affinity (Shipping) LLP was formed on 2nd January 2015,
following a management buyout of RS Platou LLP.
 We are focused on expertise rather than scale. We have a
team of 120+ worldwide covering Newbuilding and S&P
alongside Tanker / Dry Cargo / LNG spot and term
chartering, supported by first class Research and Operations
departments.
 We maintain a global presence with offices in London,
Singapore, Beijing, Seoul, Houston, Santiago, Sydney,
Melbourne, and Perth.
 Wide-ranging client base ranging from small private owners
through big corporates, stock-listed companies to oil majors
and state-owned shipyards. Ability to transact in all markets
and offering a discreet, low-profile, efficient, and effective
service to our clients.
 Growing suite of research products and bespoke analysis,
which is designed to support our clients’ decision-making
processes.

 The core of the company was transferred from Platou after

the MBO, but has been supplemented by experienced staff
joining from other major broking houses. We have grown
from a team of 55 staff on 2nd January 2015 to close to 120
staff just over a year later.

 Multinational team combines youth and experience. Partners

with between 15-40 years of relevant experience lead teams
of energetic, ambitious younger brokers.

 Particular expertise and market leading position in

Newbuilding, with an experienced team which has contracted
over 500 vessels together for owners, institutional investors
and end users.
 Our established tanker chartering teams serve the industry
from London, Houston, Singapore, Beijing and Santiago, Ashley Cadwallader Charlie Carter
delivering a highly proficient spot chartering service with a DPP & Crude Aframax DPP & Crude Aframax
prime position in the crude oil and fuel oil markets. The Simon Cass Tim Gurdon
team has close relationships with oil majors, national oil Crude Suezmax DPP MR | Panamax | Aframax
companies, oil traders, and major ship owners and David Hallpike Paul Harris
DPP Handy | MR | Panamax VLCC
operators.
Sevita Kondyliou Per Mansson
 Our projects department focuses on medium and long term VLCC VLCC
time charters and COAs. The projects team also works Wictor Mansson Max Rudd
extensively with our newbuilding, sale and purchase and VLCC DPP Handy | MR | Panamax
finance departments structuring long term leasing deals and Navid Sheikh
partnerships. DPP Handy | MR | Panamax

Pete Searles Ambar Venkataraman

Projects VLCC

Victor Gao Xu Chong Feng

VLCC VLCC
Yvonne Wang Yi Sam Ye
VLCC VLCC

Juan Villaroel
 Our clean products team currently consists of 10 brokers, 8  OUR CLIENTS: BP, Total, Shell, Vitol, Trafigura, Petrochina,
of which are based in London and 2 in Singapore. The Nyala, Valero, OTI, Mena Energy, Reliance, Enoc, Castleton
product team has been working together for nearly 10 years, (CCI), Cargill, Engen, ST Shipping, ATC, Unipec,Engelhart,
(previously at EA Gibson) which gives Affinity the necessary Noble, Clearlake, Repsol, Litasco, Novatek, Newstream,
strength and our clients an almost seamless overlap when Petrochina, EDF Mann, AFCO, O&O.
one or two are on the road. We are regarded as one of the  We are of course also direct with all major ship owners in the
strongest clean teams in the world, servicing a full range of world where we enjoy excellent support and relationships.
clients both East and West, covering all product tanker size
ranges.
 Since starting at Affinity in October, we have fixed over 800
ships as a team.
Jamie Dove Daniel Hockey
 We already have COAs with Repsol and Litasco running and
West LR West MR / Handy
are currently working on several others.
Tom Parker Alex Stannard
 CPP markets are currently focused on spot, but even with AG/WCI/Rsea: all sizes Med MR / Handy
limited period activity, we have concluded two time charter Mark Stewart James Turk
deals. We are looking forward to the arrival of a new Med MR / Handy West MR / Handy
colleague who will focus purely on tanker project business; John Widdrington Dan Yates
he will be with us later in October 2016.
AG/WCI/Rsea: all sizes West MR / Handy
 The clean products team have continued all previous
business relationships as well as creating new accounts
since starting at Affinity. We have been reinstated to most of Charles Hagger Dirk Horstmann
our previous major charterer panels. SE Asia / NE Asia / AG SE Asia / NE Asia / AG
All sizes All sizes
 Our ethos for operations and post fixtures is simple: these roles are as important to us as the chartering/commercial function and
we continue to apply those same principles of professional ship broking throughout the life of each fixture.

Glen Miller – Head of Tanker Operations – 28 Years’ Paul White – 14 Years’ Experience
Experience
George Ellis – 2 Years’ Experience
Glen became Global Operations Director at Braemar
Seascope and joined the Affinity team in October 2014. He Susanna Stokes – 1 year’s Experience
is a Fellow of the Institute of Chartered Shipbrokers (ICS), George de Jasay – 6 Months’ Experience
current Chairman of London & South Branch of the ICS,
and a member of ICS Controlling Council (which governs Victor Sua (SINGAPORE) – 14 Years’ Experience
the international ICS). He regularly gives presentations for
Priya Chandrasekara (SINGAPORE) – 3 Years’ Experience
Lloyd’s Maritime Academy.
Crystal Zhou (BEIJING)
Mark Stokes – 27 Years’ Experience
Mark joined Affinity from Braemar Seascope, having spent
eight years in Operations. He is a Fellow of the Institute of
Chartered Shipbrokers, and Unipec's broker operator of the
year for two out of the last three years.
Steve Campo (HOUSTON) – 13 Years’ Experience
Steve Campo is the tanker operations’ representative in
Houston. Most notable of Steve’s experience is the seven
years spent at RS Platou.
London Singapore Sydney
Floor 44, The Leadenhall Building, 72 Anson Road 1st Floor, 64 Alexander Street
122 Leadenhall Street, #13-03 Anson House Crows Nest, NSW 2065
London, EC3A 8EE, UK Singapore, 039190 Australia
T. +44 20 3142 0100 T. +65 6805 8760 T. +61 299 387 800
snp.ldn@affinityship.com snp.spore@affinityship.com dry@affinityship.com
newbuilding@affinityship.com dry@affinityship.com
lng@affinityship.com tankers@affinityship.com
tankers@affinityship.com
tankerops@affinityship.com
Seoul Melbourne
dry@affinityship.com
#703, Shin-A Building, Level 10, 499 St Kilda Rd
research@affinityship.com
50 Seosomun-ro 11gil, Melbourne, VIC 3004
Jung-gu, Seoul, South Korea 100-752 Australia
Houston T. +82 2755 1563 T +61 398 671 466
1301 McKinney St, Suite 2975 newbuilding@affinityship.com dry@affinityship.com
Houston TX 77010
United States of America Beijing Perth
T. +1 832 925 7500 Marco Polo Parkside Building 1005, 8/38 Colin Street
tankers.houston@affinityship.com Anli Road No. 80, West Perth, WA 6005
Chaoyang District Australia
Santiago Beijing, 100101 T. +61 892 260 618
Augusto Leguia Norte 100 – of 710 tankers@affinityship.com dry@affinityship.com
Las Condes – 7550155 Santiago dry@affinityship.com
Chile
T. +56 2 23527100
dry.stgo@affinityship.com
The information contained within this report is given in good faith based
on the current market situation at the time of preparing this report and
as such is specific to that point only. While all reasonable care has
been taken in the preparation and collation of information in this report
Affinity (Shipping) LLP (and all associated and affiliated companies)
does not accept any liability whatsoever for any errors of fact or opinion
based on such facts.
Some industry information relating to the shipping industry can be
difficult to find or establish. Some data may not be available and may
need to be estimated or assessed and where such data may be limited
or unavailable subjective assessment may have to be used.
No market analysis can guarantee accuracy. The usual fundamentals
may not always govern the markets, for example psychology, market
cycles and external events (such as acts of god or developments in
future technologies) could cause markets to depart from their
natural/usual course. Such external events have not been considered
as part of this analysis. Historical market behaviour does not predict
future market behaviour and shipping is an inherently high risk
business. You should therefore consider a variety of information and
potential outcomes when making decisions based on the information
contained in this report.
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