VLCCs on Firmer Ground as Middle East Fixtures Rose by 82% on the week
The VLCC tanker market was on a high over the course of the past week, as a result of increased demand for cargoes from the Middle East. In its latest weekly report, shipbroker Charles R. Weber noted that “a strengthening of demand in the Middle East market this week halted the downward rate trend of the second half of January. A total of 35 fixtures were reported there, representing an 82% w/w gain and the highest tally in four weeks. Fixture activity in the West Africa market was less inspiring: there were just four fixtures there – off two from last week’s tally – which reduced the four‐week moving average of regional fixtures to a two‐month low. Meanwhile, a small number of speculative ballasts from Asia to the Atlantic basin have returned amid the sour TCE environment prevailing in the Middle East market. Round‐trip AG‐FEAST TCEs presently yield an average of ~$11,081/day while round‐trip TCEs on the CBS‐SPORE route stand at ~$18,719/day.
According to CR Weber, “these ballasts contributed to a modest narrowing of oversupply during the final decade of the February Middle East program to 22 units after reaching a four‐year high of 30 units at the conclusion of the month’s second decade. The reduction of excess supply could help to improve rates during the coming week if sentiment is also influenced by demand strength, but any gains would likely be very modest at best, particularly as recent decline in bunker prices has broadly boosted voyage TCEs. Middle East Rates to the Far East route were unchanged at ws37 while corresponding TCEs were up 18% to ~$11,804/day on a 7% decline in bunker prices. Rates to the USG via the cape rose one point to ws19 to narrow the gap between triangulated TCEs and those on round‐trip voyages from the Caribbean. Triangulated Westbound trade earnings rose 22% to a closing assessment of ~$20,141/day. Atlantic Basin Rates in the West Africa market lagged those in the Middle East and posted fresh losses, accordingly. The WAFR‐FEAST route lost 2 points to conclude at ws42.5. Corresponding TCEs were off 2% to ~$14,479/day. Rates in the Atlantic Americas were stronger on declining regional availability. The CBS‐SPORE route gained $100k to conclude at $3.6m lump sum. Round‐trip TCEs on the route rose 18% to conclude at ~$19,088/day”.
Meanwhile, “Suezmax rates in the West Africa market were up slightly this week as availability levels slipped. The WAFR‐UKC route gained five points to conclude at ws57.5. Waning VLCC demand in the region has been incrementally increasing Suezmax cargo availability since late January loading dates – and as charterers move to work through February program this week, demand is expected to jump in line with a decline in VLCC coverage for late‐February cargoes. This could keep rates on an upward trend during the upcoming week. In the Caribbean market, rates were softer in a lag of regional Aframaxes, despite stronger demand to service US crude export cargoes and the stronger West Africa market. The CBS‐USG route was unchanged at 150 x ws60 while the USG‐UKC route dropped four points to 130 x ws48”, said CR Weber.
Finally, “the Caribbean Aframax market saw rates steady at an affective floor tested last last week. The CBS‐USG route was trading in the low ws80 for most of the week, concluding unchanged w/w at an assessed ws85. Meanwhile, the USG‐UKC route lost 2.5 points to conclude at 70 x ws62.5. Owners are keen to maintain present rates as the floor with some having earlier shown resistant to trades at lower levels. The disappearance of some units late during the week from position lists will likely be pointed to as a basis for modest fresh rate gains, though it remains to be seen if this will be sufficient to add to rates given that TCEs rose 42% this week on lower bunker prices”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide