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WEEKLY
Published by Fearnresearch 14. March 2012

TANKERS
Crude Although appearing rather quiet at first glance, things are happening in the VLCC market with charterers picking up tonnage; requirements for the third decade of March are far more plentiful than initially predicted. Understandably, owners remain optimistic and are offering at steamy numbers when approached by charterers, particularly for WAF liftings. April stems have yet to be released, but charterers are already pursuing early April tonnage given the fact that the position list for the first ten days of the month is distinctively thin. Suezmax activity in WAF maintained last weeks momentum, and less tonnage is available to charterers. A good deal of Suezmax activity in the Caribs and the USG has also helped to make tonnage scarcer, and this could herald further rate improvements. In the Med Suezmax charterers also had their problems as bad weather during the last few days has contributed to many port delays and limited available tonnage for dates in play. Aframax rates in the Nsea saw a marginal improvement of about 5 ws points in what can only be described as a continuing poor market. Nonetheless, a strong market for Aframaxes in the Med/Bsea is causing a number of Aframaxes to ballast away, and this may eventually improve rates in this area. In the Med/Bsea there was a significant increase in chartering activity, and this, combined with recent weather delays, bodes well for further rate increases soon. In the Caribs Aframax rates declined by about 20 ws points largely due to a more well-balanced market and enough tonnage availability. Product West activity is again muted and the lull from last week continues. MRs trading T/A are under continued pressure, pushing rates down to ws157.5 for UKC/USAC basis 37kt. There is still an abundance of available ships on the Cont and we expect rates to keep soft in the near term. Since hitting the peak last week the LR1s are now following suit with the MRs, pushing rates lower to ws122.5 for Baltic/USAC basis 60kt with the naphtha arbitrage going east shutting down again as well. Handy- and Flexisizes have seen a steep correction with ice in the Baltic disappearing slowly but surely. CrossCont rates are hence weaker at ws165 basis 30kt, and ws215 basis 22kt. The busiest market seems to be in the USG, with plenty of cargoes still headed for S.America; that being said the arbitrage for going UKC or Med is still closed, keeping rates in check ws100 basis 38kt. The few positive tendencies we saw last week seems to have been short lived and activity has yet again come down. Rates remain unchanged and LR1s still fixing at ws100 for MEG/JPN voyages basis 55kt, and rates for JET cargoes MEG/UKC are estimated to USD 1.7m basis 65kt. Despite a substantial reduction in available LR2s last week, rates remain unchanged at ws85 for MEG/JPN voyages basis 75kt. Rates for MRs trading SPORE/JPN are estimated to about ws120 basis 30kt, and MRs trading MEG/JPN see rates around ws112 basis 35kt.

DRY BULK
CHARTERING
Handy A slightly positive trend was seen last week in the Atlantic. Skaw-Passero deliveries fixed around USD 3k to US Gulf, while US Gulf deliveres fetched USD 13k for trips back to the Continent. Fronthual were hovering around USD 13500, while Cannakle deliveries tick above USD 12k for same. The Pacific market is firming up but seems in general little quieter today. Meanwhile, South Africa rates are climbing slightly, WC India/China iron ore rates still hovering between 13/14.00 pmt. Red Sea/India is still at low USD 20s. Supramax rates remained strong in the east. SE Asia/China-India rates are hovering between usd15/16k. Panamax East Coast South America grains could be the joker for the Panamax market in the near future, with rumors of China imports rising to 56 MT this year. Fewer ballasters from the Far East fueled the optimism for ESCSA April loaders, where eco vessels now fix above 16k + 600 GBB APS. With some additional fresh mineral cargoes appearing in the North Atlantic the T/A rounds are slowly moving up to around 6k on T/C. The Pacific market seems to lose some of the positive momentum caught last week, with lack of fresh cargoes and a growing list of open positions. Levels are in the low/mid 7k range. The forward market is descending, affected by the overwhelming supply of newbuildings in all segments. Moreover, rumors and news from struggling owners keep an underlying weak sentiment and trading pace relatively slow. Capesize The Pacific activity level picked up without actually bringing the rate up. In fact it fell back marginally. In addition the recent flurry of short period fixing has also ebbed. It does not help that Sanko are seeking restructuring, a new cyclone is building up off Western Australia, and the Atlantic market is still inactive. The indices have continued to drop and the forward paper curve looks a lot like last years actual curve, indicating a lack of confidence in the market.

CHARTERING

ACTIVITY LEVEL
Capesize Slow RATES CAPESIZE (usd/day, usd/tonne) TCT Cont/Far East (172 dwt) Tubarao / R.dam (Iron ore) Richards Bay/R.dam PANAMAX (usd/day, usd/tonne) Transatlantic RV TCT Cont / F. East TCT F. East / Cont TCT F. East RV Murmansk b.13-ARA 15/25,000 sc Murmansk b.13-L.pool 15/25,000 sc HANDYSIZE (usd/day) Atlantic RV Pacific RV TCT Cont / F. East 1 YEAR T/C (usd/day) Capesize Capesize Panamax Handysize Baltic Dry Index (BDI): Panamax Mixed Handysize Low This Week Last Week Low 2012 High 2012 20,200 8.25 8.60 20,900 8.55 8.70 19,500 8.25 8.60 43,000 12.70 11.00

ACTIVITY LEVEL
VLCC Firm Suezmax Firmer Aframax Mixed P. E. of Suez Soft P. W. of Suez Slower RATES DIRTY (Spot WS) MEG / West MEG / Japan MEG / Singapore WAF / USG WAF / USAC Sidi Kerir / W Me N. Afr / Euromed UK / Cont Caribs / USG CLEAN (Spot WS) MEG / Japan MEG / Japan MEG / Japan Singapore / Japan Baltic T/A UKC-Med / States Caribs / USNH This Week Last Week Low 2012 High 2012 VLCC VLCC 260,000 260,000 130,000 135,000 80,000 80,000 70,000 38.0 63.0 64.0 67.5 85.0 90.0 127.5 100.0 100.0 34.0 54.5 55.0 60.0 80.0 75.0 110.0 90.0 110.0 31.0 48.0 48.0 56.5 72.5 75.0 80.0 85.0 97.5 38.0 64.0 65.0 67.5 92.5 110.0 127.5 110.0 140.0

6,000 16,000 7,800 7.45 8.25

4,270 14,200 8,850 7.00 7.75

4,250 13,950 4,950 6.95 7.70

13,800 23,900 2,800 9,900 9.45 10.35

8,100 11,280 12,765

5,980 9,600 12,000

5,000 4,180 11,500

15,100 11,280 23,400

75,000 55,000 30,000 30,000 60,000 37,000 38,000

85.0 100.0 112.0 120.0 122.5 157.5 150.0

85.0 100.0 110.0 120.0 135.0 165.0 150.0

82.5 97.5 105.0 115.0 115.0 140.0 120.0

90.0 107.5 120.0 123.0 135.0 190.0 185.0

150,000 dwt 170,000 dwt 75,000 dwt 53,000 dwt

11,250 13,250 11,000 12,000 This Week: 855

11,500 13,500 11,500 11,000

11,000 13,000 10,000 10,000 Last week: 798

15,000 17,000 12,000 12,000

SALE AND PURCHASE

Vessel Paiute Libre Santa Pacifica Ikan Sepat Ocean ID Siam Jade Size 70 293 52 510 28 520 28 503 28 429 27 652 Built Buyer 1995 Chinese 2001 Bangladeshi 2000 Turkish 1984 European 1994 Far Eastern 1986 Chinese Price Comm. 10,50 on subs 14,80 10,00 3,00 7,80 3,10

1 YEAR T/C (usd/day) (theoretical) VLCC (modern) Suezmax (modern) Aframax (modern) LR2 105,000 LR1 80,000 MR 47,000 VLCCs fixed all areas last week: VLCCs avail. in MEG next 30 days:

19,500 16,000 13,500 13,500 13,000 13,750 48 85

19,000 16,000 13,000 13,750 13,500 13,750 previous week: last week:

17,000 15,000 12,500 13,500 13,000 13,500 47 84

20,000 16,000 13,500 13,750 13,500 13,750

SALE AND PURCHASE

Vessel Naviga Libyan Galaxy QVM Success Millenium Explorer Peter Zrinski Pacific Bravery Cape Bear Size 150 841 105 484 105 162 102 741 101 605 68 967 33 540 Built Buyer 1998 Indonesian 2008 Tanker Pacific 1998 Undisclosed 1999 Greek 1994 Greek 1999 Greek 1997 Indonesian Price 16,00 36,00 10,50 10,80 8,80 8,00 8,80 Comm. Sub tender each from arrest Coated DH

Coated Coiled

Fearnleys Weekly Report

14. March 2012

Published by Fearnresearch

GAS
The VLGC spot market has gone through another uninspiring week characterized by low activity, little change in freight rates and a Baltic VLGC index coming off in small increments every day. There are not too many prompt VLGCs at all, but the problem is they outnumber the remaining March cargoes in need of freight. The true VLGC market has not really been tested in the last week, but we assume it is somewhere in the mid USD 40s basis 1:1 Ras Tanura/Chiba - a number equal to around USD 12,000 per day on a modern VLGC and recent HFO prices. It is not crystal clear what we can expect ahead, lack of activity and initiatives should in theory put rates further down in the East, but at the same time current numbers are not far off OPEX and therefore a further noticeable reduction would be very surprising. The fashion of taking western origin cargoes east has come to an end for now as the fob/cfr delta is too low, nonetheless we expect that quite a few of those vessels enroute to the East from the West will head back into the chartering-wise tighter western hemisphere.

NEWBUILDING
A total of 9 newbuildings reported this week, 5 of which are Kamsarmax placed by NSCSA at Oshima. The reported price of USD 31.5 million is only USD 3.5 million higher than what we expect for similar ship type in China.

CHARTERING

GENERAL COMMENT ACTIVITY LEVEL

Tankers Low Average Far Eastern Prices PRICES (mill usd) VLCC 300dwt Suezmax 150dwt Aframax 110dwt Product 47dwt Capesize 180dwt Panamax 76dwt Handymax 56dwt

Dry Bulkers Low

Others Low

ACTIVITY LEVEL
COASTER Moderate 15-23,000 cbm Strong 82,000 cbm Low RATES This Week Last Week Low 2012 High 2012 SPOT MARKET (usd/month***) 82.000 cbm / FR 385,000 395,000 185,000 410,000 57.000 cbm / FR 900,000 900,000 725,000 900,000 35.600 cbm / FR 875,000 875,000 750,000 875,000 20.000 cbm / SR* 790,000 790,000 740,000 790,000 10.000 cbm ETH** 620,000 620,000 580,000 620,000 6.500 cbm / SR 500,000 520,000 470,000 520,000 COASTER Europe 300,000 310,000 245,000 310,000 COASTER Asia 240,000 240,000 235,000 240,000 * 20,000 cbm s/r reflects average spot market, LPG and Petchems (segment 15,000 / 23,000 cbm) ** 10,000 cbm eth reflects average spot market, Petchems and LPG (segment 8,200 / 12,500 cbm) *** Excl. waiting time, if any LNG SPOT MARKET (usd/day) East of Suez 138-145cbm West of Suez 138-145cbm 1 yr TC 138-145cbm LPG/FOB prices (usd/tonne) FOB North Sea / ANSI Saudi Arabia / CP MT Belvieu (US Gulf) Sonatrach : Bethioua This Week Last Week Low 2012 High 2012 121,000 125,000 150,000 120,000 125,000 148,000 120,000 125,000 148,000 Butane 1004.50 1180.00 882.35 1100.00 150,000 150,000 158,000 ISO

This Week Last Week Low 2012 High 2012 94.0 94.0 94.0 97.0 60.0 60.0 60.0 62.0 50.0 50.0 50.0 52.0 34.5 34.5 34.5 36.0 50.0 50.0 50.0 50.0 29.0 29.0 29.0 30.0 27.5 27.5 27.5 28.0

NEWBUILDING CONTRACTS
Type BC BC MT No Size 5 82000 dwt 3 57300 dwt 1 106000 dwt Yard Oshima STX Dalian HHI Owner NSCSA Helikon Densa Del Mill$ Comm. 2014 31.5 2014 2013

MARKET BRIEF
Rate of exchange JPY/USD KRW/USD NOK/USD USD/EUR Interest rate Eurodollar 12 mnths EuroNOK 12 mnths Commodity prices Brent spot (USD) Bunker prices Singapore This Week Last Week Low 2012 High 2012 83.58 80.85 76.14 83.58 1128.83 1125.12 1115.75 1158.78 5.79 5.67 5.54 6.03 1.31 1.31 1.27 1.34 1.06 3.27 125.95 180 CST 380 CST Gasoil 180 CST 380 CST Diesel 751.00 740.00 1028.00 743.00 720.00 1025.00 1.05 3.32 122.70 746.00 735.00 1006.00 728.00 707.00 1003.00 1.05 3.25 108.98 734.00 720.00 951.00 688.00 663.00 939.00 1.13 3.47 125.95 752.00 740.00 1028.00 743.00 720.00 1025.00

Propane 1104.00 1230.00 658.28 1160.00

Rotterdam

979.25

SALE AND PURCHASE

Vessel Cbm Type No reportable sales this week Built Buyers Price Misc

DEMOLITION
Vessels sold for demolition VLCC/VLOO Year to date 2012: 5 Year to date 2011: 3 2011 total: 14 SUEZMAX 5 1 6 CAPE/OBO 9 17 65

SOLD FOR DEMOLITION

Vessel name BC Northgate OBO Trust Integrity MT Smooth Hound CONT Aramis BC Mohawk Princess BC Karmen CONT Cape Race BC Aspen Arrow CONT Theraps GC Professor Barabanov GC Eastern Carrier LPG Maregas Size 179 422 96 027 84 040 43 198 40 300 38 135 35 071 28 030 20 270 19 943 Ldt 23 102 15 136 21 290 14 342 8 196 9 359 13 496 8 603 6 851 10 816 Built 1984 1992 1993 1984 1982 1983 1993 1985 1992 1983 Buyer Chinese Bangladeshi Pakistani Chinese Indian Indian Indian Chinese Indian Indian Price 438 470 505 425 485 480 490 432 513 485 438 640

14 930 67 776 1985 Chinese 7 656 3 642 1983 Indian

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