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Navios Maritime Acquisition Corporation Message Board

  • mikeyhorsehead mikeyhorsehead Nov 30, 2012 8:30 AM Flag

    Scorpio takes two

    Scorpio takes two

    Scorpio Tankers has chartered in a pair of long-range one product carriers in a move that appears to illustrate its faith in a market uptick.

    Emanuele Lauro, CEO of Scorpio Tankers.
    The first vessel, which was built in 2003, was chartered in for two years at a rate of $11,250 per day and includes a 50/50 profit sharing component.

    The deal comes with an option to extend the fixture for another 12 months at $12,500 daily with a similar profit sharing provision.

    The second ship, which hit the water in 2007, was taken for one year at a rate of $12,500 per day and includes an option for an additional six months at $14,250.

    In a statement the US-quoted shipowner said both units are due for delivery by the end of January 2013 but failed to identify the duo or counterparties by name.

    Given a recent spike in rates observers say Scorpio won’t have too much trouble turning a profit if the vessels trade in the spot market but note the tides could turn before the contracts expire.

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    • I have never understood the basis for these chartering-in transactions. One would assume that the ship owner could always charter the ship at the going rate to someone in need of shipping. So, the owner is presumably not giving STNG a below market deal. No sense in that. Therefor, STNG seems to be betting that charter rates are going to be moving up, allowing them a profit. But the ship owner and the people that charter ships are presumably as savvy on the direction of rates. So all charters are made with a theory as to the direction of charter rates. I'm not understanding the premise for STNG to make a profit on ships that are chartered in. I see plenty of shipping companies that charter in these vessels. I just don't understand how they expect to reliably finesse the ship owner enough to make a good profit.

      Are these chartering-in arrangements made only when the market for vessels is momentarily devoid of lessors? So, STNG's function is like the "market maker" in the stock market. STNG provides liquidity for the market at a time when this very thinly traded market is devoid of buyers and, in fact, STNG gets the vessel at a below market rate.

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