A weekly thread to discuss financial matters - from personal all the way up to global.
Ground Rules
- Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
- Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
- Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
- Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
Jump in the discussion.
No email address required.
Notes -
Glad I didn't sell my tanker stocks a couple weeks ago...
The situation with oil tankers continues to be maximally beneficial to rates. For perspective, in normal times, a VLCC oil tanker might earn $50,000/day. Now, it's closer to $500,000/day (although many tankers are still locked in at lower rates from. contracts before the war).
I'd like to thank the kind people at Sinokor (the South Korean shipping company) for this financial windfall.
Even before the war, Sinokor was helping to prop up oil tanker stocks because they were buying up capacity and raising the prices for ships. Now, during the Iran War, Sinokor appears to be the main company that is ferrying oil through the strait of Hormuz, often via smaller ships that then transfer the oil onto larger VLCCs.
This process is expensive and slow, and restricts the total amount of shipping available, thus raising rates.
Funny enough, Iran has now noticed Sinokor and it is "sanctioning" the company for violating its "closure" of the Strait of Hormuz. This is of course, farcical, since Iran is already trying and mostly failing to hit any ship it can.
Insurance to move oil through the strait must be astronomical, but Sinokor is a Chad company, not a virgin company. It's highly unlikely that they are paying insurance. Even if ships get hit, the windfall profits are so high it easily makes up for it. Why pay for insurance on a ship that will earn its entire value in a few months anyway? Plus, if a ship goes down, Sinokor already controls like 25% of the market, so it's probably on net positive for Sinokor. (Not that Iran is doing a ton of damage anyway).
So the shipping situation continues to go on with no end in site. It's adding something like $30/barrel to the cost of shipping oil to China. The U.S. is largely isolated from the cost increase.
Clearly this is still a very lucrative business. The threat for shipping firms isn’t really losing the value of a ship, though, it’s that lead time on new tankers is limited, production has been very low since oil prices cratered in 2014, and everybody who still makes them (mainly the Chinese) is at max capacity with no slack for years. Since anybody who has them is printing money right now, there’s also no incentive to sell or lease them to other firms except at prices / rates that negate much of the Hormuz profiteering bonus. So it is still a real gamble - whether or not you have insurance.
I'm almost there, keep going...
The setup for tankers isn't quite so positive unfortunately. There are quite a few deliveries coming the next 2 or 3 years. Normally this would only offset scrapping, but I don't think anything that floats will be getting scrapped in this environment.
But yeah, 15 year old ships are getting sold for the same price as it costs to build a new ship. (Ships normally last about 20-25 years). So the shortage is acute.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link