Festive season sees rates tumble to bargain-basement levels

PUBLISHED : Monday, 10 January, 1994, 12:00am
UPDATED : Monday, 10 January, 1994, 12:00am

SHIPOWNERS have been emulating the British retail industry by holding sales over the Christmas and New Year period, during which rates for very large crude carriers (VLCCs) have dropped as low as Worldscale (WS) 32.5 for voyages to the West, but the plunge has now been arrested.

The latest rate reported for a VLCC from the Middle East Gulf to the West indicates that the market is now around WS 35/37.5.

It must be remembered, however, that this is on the Worldscale 1994 Schedule, which means in effect that owners are earning some US$150,000 less on a voyage to Europe, highlighting the precarious position of the large ship market.

An ultra-large crude carrier (ULCC) fixing this week to the US Gulf obtained WS 34, for which the owner must have been eternally grateful, given the levels obtained for this size of vessel a little earlier.

VLCCs trading to the East have found the situation as bad, with voyages to South Korea fixing at WS 37.5.

A slightly higher level, WS 38.5, was paid by Japanese charterers, although this did involve discharging at three ports. The level to the Red Sea stands at WS 32.5.

Whilst only 16 VLCCs and ULCCs of 4.5 million tons were fixed out of the Middle East Gulf last week, against seven million tons in the preceding week and 5.5 million tons in the week before Christmas, there has fortunately been an absorption of a further nine similar size vessels from other areas.

In spite of this, there are still some 90 vessels of 25 million deadweight tons that will need cargoes between now and February 7, and should the possibility of a cutback in supply by the Organisation of Petroleum Exporting (OPEC) producers become reality, it could prove catastrophic for vessels awaiting cargoes.

Although it is now some three weeks since our last report, the 80,000-ton vessel out of this area has suffered a diminution in its earnings from the level of WS 160, which was paid at that time for a voyage to Singapore, to WS 120 paid this week for thesame destination and WS 140 to Mombasa.

In the products sector, despite a fairly active start to the clean market this year, it soon became apparent that in most loading areas owners were struggling to maintain rates, especially bearing in mind the new revised 1994 Worldscale Schedule, and with inquiry waning by the end of the week, Charterers are finding it easier to reduce freight levels.

For owners of large-range clean vessels ready in the Middle East Gulf in January, the year started slowly, with owners enjoying mixed fortunes.

Western traders obtained cover on a 60,000-ton vessel at WS 175, and Japanese charterers closed 55,000 tons of naphtha to Japan at WS 190.

Tonnage has been covered to South Korea for February loading at the discounted level of WS 185/187.5.

on LPG and vessels with small cubics.