17th April 2015

THE DRY CARGO INFLUENCE!

In terms of numbers, tanker newbuilding contracting achieved its highest first quarter total since the corresponding period in 2007. Confirmed orders above 25,000 dwt totalled 84 units amounting to 12.1 million deadweight tonnes and include 19 Aframaxes, 18 Suezmaxes and 13 VLCCs. Robust ordering for clean tonnage was also apparent and included 17 LR2s, 12 LR1s but just 5 MRs. 50% of all orders were contracted in January (42) falling to 25 in February and just 17 in March. It comes as no surprise that the bulk of the orders were placed in Korean shipyards with 57 orders (63%) of all confirmed contracts.

One of the key features of ordering activity during this quarter has been the number of Capesize drybulk carriers (180,000 dwt) which have been converted into tanker contracts. Our records show that during the 1st quarter, 15 Capesize orders were confirmed as transferring to 8 LR2s, 4 Aframaxes and 3 LR1s which has helped to swell the tanker orderbook. We are also aware of other owners waiting in the wings to do similar deals to reduce their dry cargo exposure. Very

recently an order for 4 ice class 1A Aframaxes for TMS Tankers has emerged, the first contract for ice class tonnage in this size range since November 2010. In January, AMPTC placed an order for 2 coated Suezmaxes (or LR3s) both for delivery in 2017. This order has created a great deal of interest in this segment as questions remain over product berth infrastructure capable of handling this size of unit. In January, Knutsen NYK Offshore ordered another DP2 shuttle tanker from Cosco Zhoushan. The order had a timecharter attached and will operate in offshore Brazil. Navig8 added 2 more ‘wide beam’ LR1s to their existing order of 10 similar vessels. Wider beam LR1s have gained popularity, designed to provide additional cargo capacity and fit the new enlarged locks on the Panama Canal. In terms of numbers, we have already reached 50% of the total orderbook achieved in 2014. Today, perhaps owners are being more selective in the vessel types contracted evidenced by some of the more niche tonnage mentioned above. As we start the 2nd quarter of the year, there are perhaps many economic and political uncertainties that could apply the brakes to slow ordering activity. It is also noticeable that Hedge Fund and Private Equity funding has taken a lower profile and could be an indication that shipping has lost its allure for this type of investment. However, newbuilding prices continue to remain tempting which could attract further investment, although concerns about the delivery profile going forward may dissuade owners from further investment. What is also certain is that tanker owners do not want to take the backlash of the failings of the dry cargo market.

CRUDE

Middle East_________________________ VLCC Owners had to endure a rather frustrating week. Previously they had benefited from the post-Easter rush to fix, and had been hopeful/confident of pushing their envelope a bit further, but thinner than anticipated end April demand, and a stubborn witholding policy by Charterers towards their May programmes, combined to let rates slip back to an average ws 60 East and low ws 30s to the West. Things are now becoming more active, however, and there should now be a good scrap to set the mark for the bulk of the month’s demand. Suezmaxes started slowly..ended busier, but availability remains sufficient to deaden any real upward ambition, and rates stay at around ws 80 East and mid ws 30s to the West accordingly. Aframaxes bumbled along at an unchanged 80,000 by ws 105 to Singapore, and look as if they will continue bumbling similarly over the near term. West Africa_________________________ Suezmaxes initially remained stuck in their recent hole, but as Charterers tried to bargain hunt upon more forward positions, and as the market noise picked up in other Atlantic/Med zones, tonnage lists thinned somewhat, and Owners demanded 'insurance' premiums for those forward positions. Rates moved up modestly to 130,000 by ws 72.5/75 inter Atlantic, and could add some more fat if the cargo flow picks up further. VLCCs found quite strong interest upon relatively early dates and that allowed for rates to hold steady within a ws 61/65 bracket for the duration. Charterers will attempt to sit on their hands now on later positions in the hope that the AGulf moves off further, but will be quick to act thereafter if it doesn’t.

Mediterranean_____________________ Aframaxes in the Med inflated slightly, but then the balloon became punctured by a refusal by Charterers to continue to play the game and rates eased back to 80,000 by ws 102.5 X-Med by the week’s end. Suezmaxes made the most of modest local enquiry to keep rates at close to 140,000 by ws 75 from the Black Sea to European destinations and solid interest to the East added reinforcement at the $3.8 million level to China. Caribbean_________________________ Aframaxes slipped a little, but Owners regrouped upon a busier scene and regained the lost ground to end at 70,000 by ws 150 upcoast with further improvements possible into next week. VLCCs dug in and their patience paid off as Charterers then fed more eagerly to stabilise rates at $5.7 million to Singapore, and just under $5 million to West Coast India. There’s still more work to be done, however, to allow for a break-out. North Sea___________________________ Much better for Aframaxes than of late. A relatively action packed week pushed the market towards 80,000 by ws 145 X-UKCont, and to 100,000 by ws 125 from the Baltic and there still seem to be some legs left to the market for early next week, though onward stamina must remain in doubt given the previous form. Fuel oil 'Arb' interest reignited on the larger sizes and as VLCC were so tight, deals at up to $5.6 million to Singapore were recorded. The lack of VLCC tonnage swung some focus then onto Suezmaxes, and $3.4 million for the same run was reflective of what was concluded.

CLEAN PRODUCTS

East______________________________ LRs in the East have finally seen the correction predicted for a while. LR1s have seen the biggest hit with 55,000mt Naphtha AG/Japan falling rapidly to ws 107.5, and although unproven, 65,000mt Jet AG/UKCont is down to $2.0 million. LR2s have seen further drifting of levels with 75,000mt Naphtha AG/Japan at ws 92.5 and 90,000mt Jet AG/UKCont at $2.30 million. The MRs have had a busy week with a good amount of volume getting fixed. Tuesday saw most of the action with a surge of enquiry which led to the top of the list tightening up fairly instantaneously. $1.7 million got confirmed for AG/UKCont; the highest number we have seen in a while, again clearly demonstrating the faith the Owners are putting in the East market as opposed to trying their luck in the West. 35kt for AG/EAfr has been busy with ws 175 being the rate on subjects at the time of writing. 35kt Naptha for AG/Japan has seen a small lift too with 35kt x ws 135 being the market level off prompt dates. X-AG and AG/Red Sea has been the notably quieter trade routes this week but we are calling those $300k and $725k respectively. It has been a fairly steady and uneventful week all in all for the North Asia CPP markets with very little change in freight rates. A steady supply of enquiry from Charterers has kept the MR market ticking over nicely, and Korea/Singapore is fairly well established at $490,000 levels. In the Singapore region, the MR list has been tight in the prompt position, as some of the early ships have been picked off for AG-WCI loaders. Singapore/Australia is well established at around 30 x ws 177.5 levels. LR1s have been fairly quiet this week and have softened slightly as a result - Korea/Singapore should pay around $550,000 on the LR1s now. LR2s have also been quieter - $620,000 was last done for Korea/Singapore and is a fairly good barometer for the market now, which looks steady.

Mediterranean____________________ A rollercoaster start to the week with all sorts of numbers fixed and on subjects and absolutely no-one in agreement as to the market level. Owners resorted to throwing outlandish numbers around and hoping something stuck, which occasionally it did with 30 x ws 300/ 310 confirmed from the Black Sea.

The market has now quietened, with 30 x ws 260 reported on subjects in the West Med. Where they can, Charterers have of course resorted to fixing around the market with 30 x ws 205 fixed yesterday from Black Sea on an unapproved unit and due to the freight differential against the DPP market, some Charterers have taken clean-up ships. The market is expected to soften into next week, but the end/early window could yet be busy especially from Black Sea as Charterer's will need to fix further ahead than usual due to the delays being caused by the building of a 3rd bridge over the straits. On the MRs, there has been very little enquiry East so that route will require testing but potentially around $1.1 million Red Sea / $1.2 million AG. For West Africa, considered a premium above the UKCont at around 37 x ws 160-165 and 37 x ws 150 Transatlantic.

UK Continent_____________________ A steady week on the UKCont and despite regular cargo enquiry, the market struggled to gain much momentum and hovered at ws 140. Although, by the weeks end the deadlock was broken and we saw 37 x ws 147.5 placed on subjects, and Owners ideas have firmed. UKCont/WAfr trades at a 15-20 prompt premium. Handies and Flexis have had a relatively lacklustre week and trade at 22 x ws 190 and Handies slipped slightly to 30 x ws 185. LR1 enquiry picked up a little after a quiet few weeks, keeping rates buoyed at 60 x ws 140 UKCont/WAfr this week with enough fixing to keep the list balanced. LR2s enjoyed a steady week of fixing, firming rates X-Med back up to $2.75-8 million levels despite the list looking as if it may lengthen after next month.

Caribbean________________________ The USG market suffered from a lack of inquiry this week; a flat demand for product and closed Arbs Transatlantic combined to ensure Owners were chasing employment and rates inevitably suffered. Rates bolstered by end of last week’s activity have since been negatively corrected and we would expect further losses going into next week.

DIRTY PRODUCTS

Handy____________________________ From the results of another weeks trading Owners will be wishing that memories be swiftly forgotten having lost further value from the price of a X-UKCont movement. The closing stages of the week did show a slight pickup in activity that in turn helped to reduce the overhang of spot tonnage, although immediate conditions are likely to remain subdued before any recovery is seen. In the Med we saw a whirlwind couple of opening days where activity levels threatened to cause a change of trend. Alas, as we approached mid-week, momentum ground to a much slower pace, allowing Charterers to keep a lid on rate aspirations. In this region however, there is growing expectation that momentum could be passed on from a CPP market if only a few more units take the plunge and switch trade. MR______________________________ MR's this week appeared to have enjoyed an upturn in demand where if it were not for the lack of support from surrounding sectors, positive impact should otherwise have been made to freight rates.

Owner confidence as in any market can be the decisive factor in determining volatility and from recent form, the damage is clear to see. We finish the week needing more of the same if any reversal in trend is to be seen. Panamax_________________________ Throughout the week positive pressure had been slowly building where activity levels have managed to slowly clip away the majority of naturally placed tonnage from this side of the Atlantic. This in turn has left the next round of fixing in a very much date dependent state. A carful eye needs to be kept on the tonnage lists as any Owners willing to ballast this way from the states will now be looking to bridge the recent disparity in fixing levels compared with numbers seen in the US. Numbers from Europe have seen a rise, where the time length between now and the next wave of fixing is expected to determining factor whether or not Owners can keep momentum rolling on.

PAT/JH/JD/DP/LHT

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E.A. GIBSON SHIPBROKERS LTD., AUDREY HOUSE, 16-20 ELY PLACE, LONDON EC1P 1HP Switchboard Telephone: (UK) 020 7667 1000 (International) +44 20 7667 1000

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wk on wk Apr Last Last FFAchange 17th Week Month Q1 15

TD3 VLCC AG-Japan +3 63 59 50 45TD20 Suezmax WAF-UKC +6 73 68 85 70TD7 Aframax N.Sea-UKC +29 138 109 95 97

wk on wk Apr Last Last FFAchange 17th Week Month Q1 15

TD3 VLCC AG-Japan +2,500 66,500 64,000 48,500 37,500TD20 Suezmax WAF-UKC +2,750 34,250 31,500 45,500 37,250TD7 Aframax N.Sea-UKC +22,000 57,250 35,250 24,500 23,500

wk on wk Apr Last Last FFAchange 17th Week Month Q1 15

TC1 LR2 AG-Japan -3 95 98 105TC2 MR - west UKC-USAC +0 136 136 156 100TC5 LR1 AG-Japan -17 109 126 130 113TC7 MR - east Singapore-EC Aus +2 179 177 188

wk on wk Apr Last Last FFAchange 17th Week Month Q1 15

TC1 LR2 AG-Japan -2,500 24,750 27,250 30,500TC2 MR - west UKC-USAC -750 18,250 19,000 24,000 9,750TC5 LR1 AG-Japan -6,500 20,750 27,250 28,750 21,500TC7 MR - east Singapore-EC Aus -500 21,000 21,500 24,0000

LQM Bunker Price (Rotterdam HSFO 380) +26 321 295 288LQM Bunker Price (Fujairah 380 HSFO) +28 348 320 318LQM Bunker Price (Singapore 380 HSFO) +25 344 320 306LQM Bunker Price (Rotterdam 0.1% LSFO) +43 555 513 505

(a) based on round voyage economics at 'market' speed

Dirty Tanker Spot Market Developments - Spot Worldscale

Dirty Tanker Spot Market Developments - $/day tce (a)

Clean Tanker Spot Market Developments - Spot Worldscale

Clean Tanker Spot Market Developments - $/day tce (a)