11-02-2017

Asia Tankers-VLCC rates to stay around current levels on MidEast cargoes

VLCC

Freight rates for very large crude carriers (VLCCs), which hit a two-week high, could hold steady next week as owners await the release of March-loading programme from the Middle East, brokers said.

“I’m not sure rates will go up much more. It was a surprise how quickly the market turned,” a European supertanker broker said on Friday.

“We’ll see some Basra cargoes come out on Monday. Saudi Arabia cargoes should come out around Feb. 16.”

Brokers had expected rates from the Middle East to Japan to stay largely unchanged or nudge higher this week.

Instead, VLCC charter rates jumped by 10 points on the Worldscale measure in the week to Thursday, equivalent to a rise in daily earnings of $7,400, chartering data on the Reuters Eikon terminal showed.

They were buoyed by a flurry of Middle East cargo fixtures for February loading, Norwegian shipbroker Fearnley said in a note on Wednesday.

As new buildings and older ships were fixed, rates started to firm, Fearnley added.

“Steady activity in West Africa for March (loading) is keeping momentum up. Therefore, (the market has) stabilised for now but OPEC cuts will eventually have effect on activity.”

Around 12 cargoes have been fixed for loading from West Africa up to March 11, of which nine are destined for China, data on Reuters Eikon showed.

That came as China’s red-hot crude oil buying saw the number of West Africa cargoes climb to 40 in February, the highest in at least 13 years, a Reuters survey of traders and shipping data showed.

The VLCC market is “challenging”, said a second European tanker broker.

“Owners are scared of leaving (Worldscale) points on the table,” the broker added.

VLCC rates on the Middle East to Japan route climbed to around W76.50 on Thursday from 66.50 last week. That is equivalent to daily earnings of $37,101, the highest since Jan. 26.

Rates on the West Africa to China route rose to W75 on Thursday, the highest since Jan. 30, against W71 the week earlier.

Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia dropped to around W99.50 on Thursday, the lowest since Dec. 23, from W105.25 on the same day last week.

That is equivalent to $8,577 per day, a fall from $10,120 per day last Thursday.

Brokers said the Aframax market had plateaued and could start to climb again on a rebound in cargo volumes and short-term time charters.

Source: Reuters 

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