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PNSC invites bids to procure three used Aframax tanker vessels

PNSC invites bids to procure three used Aframax tanker vessels

PNSC invites bids to procure three used Aframax tanker vessels
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KARACHI: The Pakistan National Shipping Corporation (PNSC) will procure three second-hand Aframax tanker vessels, while offers had already been sought from shipbrokers enlisted with Baltic Exchange, an official said.

An Aframax vessel is an oil tanker with a deadweight between 80,000 and 120,000 tonnes. The term is based on the Average Freight Rate Assessment, a tanker rate system created in 1954 by Shell Oil to standardise shipping contract terms.

An official said that the PNSC was expanding its customer base in the tanker segment. “Due to their favourable size, Aframax tankers can serve most ports in the world.”

“These vessels serve regions that do not have very large ports or offshore oil terminals to accommodate very large crude carriers and ultra-large crude carriers. Aframax tankers are optimal for short-to medium-haul crude oil transportation,” he added.

Presently, the PNSC has six tankers including Khairpur, Bolan, Quetta, Lahore, Karachi and Shalamar. The Corporation also has five bulk carriers including Chitral, Malakand, Hyderabad, Sibi and Multan.

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An official said that during the first half of FY2020/21, the business momentum accelerated while overcoming the challenges posed by the second wave of Covid-19 pandemic, which had an adverse impact on global economic growth, including Pakistan.

“The State Bank of Pakistan (SBP) has taken a host of measures to dilute the impact of the pandemic, including cut in interest rates and introduction of refinance schemes,” the official said.

“This act of the SBP has created an opportunity for the Corporation to expand its managed fleet portfolio with the availability of cheaper financing in the form of Long Term Financing Facility (LTFF),” he added.

According to PNSC’s last financial report, charter rates and asset prices in the dry bulk shipping markets have been moving upwards. The Baltic Dry Index has increased 3.8 times in the last 9 months of this calendar year.

The worldwide demand for dry bulk commodities has significantly recovered, especially in China, following economies re-opening post Covid-19 lockdowns.

As reported by some observers, the industry may become a victim to its own success as shipping backlogs and surges in commodity prices globally can cause factories to decline in productivity.

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Even as efforts are being made internationally to resolve supply chain bottlenecks, a temporary reduction in raw material demand may damage the recent positive sentiment for the dry bulk sector.

On the other hand, the liquid bulk tanker markets have largely remained muted with Covid-19, causing a reduction in oil consumption worldwide.

With no major reduction in fleet capacity in sight, the market remains oversupplied, thus contributing towards lower charter rates despite volatile and high asset pricings within this sector as compared with 2020 levels.

Looking forward, growth in the oil prices may cause a slow but gradual shift in demand for renewables bringing the world closer to the reality of peak oil, which does not bode well for the tanker markets at its current fleet capacity levels.

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