most vessel classes, with Suezmaxes and Aframaxes being particularly hard hit amongst crude
tankers. While oil demand forecasts have been revised higher over the past few months, the
reality is that final demand does not appear adequate to offset the plentiful supply of vessels,
while persistent high levels of inventory exacerbate the situation, in our opinion. However, there
is some hope that the market situation in 2010 could improve if the more positive demand
projections are realized and single-hull scrapping for the soft IMO deadline is robust.
n We have updated our rate assumptions, forecasts and price targets for a number of tanker
names in our coverage universe (see page 10). We downgrade OSG to a SELL (from
HOLD) and TNP to a HOLD (from BUY). We maintain our HOLD rating on DHT and
GMR and our SELL rating on NAT and ONAV.
n Dry Bulk: The dry bulk market had another strong quarter in 3Q:09 as high levels of iron ore
imports in China, combined with the grain season in the Atlantic and strong coal imports into
Asia, helped to push rates higher, specifically for the smaller Panamax and Handymax sectors.
However, our near-term outlook for Capesize rates has become more negative as faltering steel
prices, accelerating fleet growth and the absence of Vale from the spot market begin to impact
the market, in our opinion.
n We have updated our rate assumptions and forecasts for a number of dry bulk names in our
coverage universe (see page 22).
n LPG: Time charter rates for LPG carriers continued to fall in 3Q:09 as demand remained weak,
in our opinion. However, the oversupply situation improved, as newbuild deliveries were offset
by high scrapping levels. We believe an uncertain outlook for Middle Eastern exports, combined
with excessive tonnage supply, could lead to a difficult near-term market environment.