Rates slip despite more business
IN spite of a reasonable level of activity with about 23 VLCCs/ULCCs fixed from the Middle East Gulf, the over-tonnaged position (potentially 100 units still available until the end of next month) and a lack of confidence in the market have resulted in rates slipping further.
The rate for a VLCC to the West now stands at WS 40 while one owner was willing to discount this by one WS point for the short voyage to the Red Sea.
Rates for eastern destinations were also established at WS 40 for South Korea/ Japan.
Inquiry for 80,000 and 130,000-tonners remained thin and a modern 97,000-tonner to Australia achieved WS 85.
Despite a generous volume of inquiry from West Africa, owners were unable to make any gains. Charterers found themselves with enough choice of tonnage, and rate levels remained basically unchanged from those of the previous week.
Tonnage was secured in most cases at WS 60 for discharging in the United States or Europe on sizes between 120,000 and 130,000 tons although modern units were able to command a slight premium of 2.5 points.
The availability until the middle of next month would indicate an opportunity for owners to take the initiative, provided demand maintains its present pace.
Charterers operating from the Mediterranean found themselves under some pressure as the threat of an embargo on Libyan crude from the West appeared more likely.
A number of companies requiring prompt tonnage were forced to concede to owners' demands for higher rates and the latest fixtures concluded for 80,000 tons were reported in excess of WS 105 for a cross-Mediterranean voyage.
It is unlikely, however, this trend will continue as the supply situation becomes clearer.
One-million barrel tonnage has also benefited, albeit to a lesser extent.
Fixtures were concluded in the region of WS 60-62.5 although a 130,000-tonner would now hope to obtain a rate in excess of WS 65.
A cargo of two million barrels loading in the eastern Mediterranean for northwest Europe was reported to have been covered at WS55.
Unfortunately, a quiet market in the Caribbean did not allow owners to maintain the gains of the previous week and the current level for 70,000 tons to the USAC at WS 90 represented a 10-point fall.
More trading activity in the North Sea contributed to a 10-point increase for 80,000 tons to the UK-Continent, which was last fixed at WS 96.25.
Interest in larger units continued with both one-million and two-million barrel vessels being fixed and rates showed some improvement with 130,000 tons to the USAC reported at WS 70.
LR owners are now more hopeful of a firmer market continuing until the end of the year.
In the Middle East Gulf-Japan trade, a cargo of 55,000 tonnes was confirmed at WS 167.5 while 65,000 tonnes reportedly obtained WS 145.
A holiday in Japan, combined with uncovered tonnage for the first half of next month, tended to slow the market and only time will tell if owners' optimistic views are realised.
Smaller vessels have not fared as well. For Middle East Gulf-India business, rates declined to WS 215 on 30,000 tonnes and an LPG vessel took 35,000 tonnes at WS 175.
There was, however, renewed interest from charterers for end-September liftings, causing owners to hold numbers and stop a possible rot.
In the Mediterranean, although inquiry was mainly limited and fixing levels held steady at WS 155, there was still a distinct lack of naphtha-suitable tonnage, especially within this month, and freight levels should certainly lie within the WS 175-180 range.
Clean product movements to the US or Middle/ Far East were not evident.
Again the steady stream of inquiry for Caribbean-upcoast movements cleared out most of the early tonnage and owners managed to halt any freight level drop rather than being able to take any great advantage of the cargoes.