Freight rates for very large crude carriers (VLCCs) are set to maintain the current levels next week as charterers drip-feed cargoes for August loading into an overtonnaged market, ship brokers said.
“There is quite a negative outlook… we may be close to the bottom. We do expect a lull at this time of the year,” a Singapore-based VLCC broker said.
Shipowners are holding the line on the expectation that there will be a lot more volume to work next week.
“That came as ship brokers said there were hardly any Basra cargoes that had so far been released for August loading. It seems a much lighter programme for August,” the broker added.
Several Asian refiners are maintaining or reducing crude throughput in July and August after refineries around the region in the first quarter binged on the cheapest crude in over a decade.
Despite the slowdown at some Asian refineries, the number of VLCC fixtures from the Middle East to East and West destinations climbed to 139, one of the highest in recent months, the Singapore broker said. The average number of fixtures is around 125-130, the broker added.
“July was a bumper month for fixtures but not for earnings,” the broker said. Current earnings are down to about $26,000-$27,000 a day compared with around $101,000 a day on January 1, data from British shipping services firm Clarkson showed.
Reduced cases of port congestion, where unloading delays in China have eased to three or four days compared with three or four weeks in April, a raft of new ship deliveries and ships coming out of dry dock after repair, and calmer weather have meant more tankers are available for charter, brokers said.
“Recent weakness in crude tanker day rates signals further price declines over second half 2016. Declines will be driven by both a slowdown in demand and rising overcapacity in the tanker market,” said energy consultant BMI Research in a report this week.
VLCC rates from the Middle East to Japan were around 44 on the Worldscale measure on Thursday, up from about W42.50 last week.
Charter rates for VLCCs from West Africa to China fell to around W48 on Thursday, against W49.75 a week earlier. That’s the lowest since early September.
“Charterers are cautious when entering the market as they are carefully drip-feeding the market with enquiry,” Norwegian ship broker said in a note on Wednesday.
“With an ample position list, the charterers have plenty of vessels to choose from for the time being as July fixing is coming towards an end. With a lot of roll-over tonnage and a reported small export programme in the Middle East, we expect the rates to move sideways for the nearest future,” Fearnley added.
Rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia fell to about W89 on Thursday, the lowest since May 26, and from W95 the same day last week on tighter cargo volumes, brokers said.
Source: ReutersPrevious Next
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