Owners finally break through charterers' drive to crush rates
INACTIVITY in the Middle East Gulf on the very large crude carrier (VLCC) and ultra-large crude carrier (ULCC) market over the past three weeks has been a determined effort by charterers to push down rates.
Last week, however saw more than 25 vessels totalling 6.5 million tonnes being fixed, twice the amount in the previous two weeks, resulting in VLCCs seeing rates to the West fall from Worldscale (WS) 44 at the beginning of the week to WS 38 in the middle of the week and then bounce back to WS 42.5 at the end of the week.
Once owners realised the enquiry would continue, particularly for modern units, resistance set in and the latest fixture of a 250,000-tonne, modern vessel to Brazil was WS 50, encouraging other owners.
In West Africa, rates have continued to firm, with the latest fixtures reported being WS 77.5 for the US Gulf, WS 80 for the US Atlantic coast and WS 82.5 for discharge in Europe.
The Mediterranean market for Aframax tonnage also has seen a swing during the week. Rates for 80,000-tonne cargoes to both Europe and the Mediterranean stood at WS 90 as the week opened, but by the middle of the week a fixture had been reported for a cross-Mediterranean movement at WS 105.
However, with enquiry fading towards the end of the week, rates of around WS 95 would be more indicative of the market.
The Caribbean market, although remaining reasonably healthy, has seen a gradual erosion in levels with the rate for 70,000-tonnes cargo loading in the Caribbean for discharge in the US being WS 135 and trans-Atlantic movements for similar size tonnage concluded at the WS 100 level.
Increased activity in the North Sea basin has provided the opportunity for Aframax owners to push rate levels through the WS 100 mark.
The product market has followed a similar pattern to the previous week, with most tonnage trading in the West finding it difficult to maintain levels.
On the other hand, those trading in the East have had a better opportunity to improve rates.
In the Middle East Gulf, increased enquiry for tonnage loading during the second-half of next month on the Large Range (LR) has seen rates return to WS 150 for 55,000-tonnes cargo on the Japan trade.
Medium Range (MR) enquiry also has increased, particularly in the Far East, where rates of US$225,000 lump-sum have been paid for 30,000 tonnes for voyages from Singapore to Hong Kong and WS 195 for 30,000 tonnes to Japan.
Owners of Handysize vessels regularly trading in northwest Europe have had a disappointing week.
There have been only two or three fixtures concluded and levels for Handysize lots of gasoil remain at WS 190.
Report supplied by London ship broker E.A. Gibson.