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As the global economy is trying to estimate the full impact of
COVID-19 so far, there is no doubt that shipping has been one of
the industries having suffered many casualties since Q1 2020.
However, tanker rates seem to be occasionally benefited by these
unprecedented times, with volatility having pushed VLCC rates above
USD 200,000 in April 2020 and then to extreme lows in August and
early September. VLCC carrying crude oil from the Middle East Gulf
to China were fixed on 3rd September for just USD 6,100 per day,
but rates jumped to more than USD 24,000 per day on 11th September
once first rumours started to spread around a potential second wave
of interest for floating storage of crude oil in Q4 2020.
The market has faced severe delays due to congestion close to
Chinese ports during the last couple of months, with the sentiment
only recently changing despite the high number of laden VLCCs
waiting in the queue to discharge millions of barrels. The market
is very different now though, with floating storage (on ships laden
and not moving for 14+ days) having recently dropped close to 100
million barrels and the low TCE earnings (below OPEX) allowing
traders to identify opportunities for long-term storage.
Oil demand remains under severe pressure, but the first signals
of recovery cannot be ignored. On a global scale, hope now relies
on the vaccines developed which could prove to protect a large
portion of the global population by early H2 2021. Consumption will
remain notably below last year's level till the end of 2020 though,
with a rather weak performance for aviation.
With oil demand still hit hard by COVID-19 and oil prices having
lowered further, traders consider opportunities for cheap tonnage
which could yet again store millions of barrels of crude oil
offshore till China's appetite starts looking stronger.
Some shipowners moved quickly to secure employment for their
units, at quite attractive term charter rates. Norwegian Hunter
Group just fixed the 300,000-dwt "Hunter Disen" (built 2020) at USD
38,000 per day for between five and seven months. This deal can be
considered another example of opportunities driven by the newly
increasing interest in VLCC as traders keep looking to secure
tonnage for potential crude floating storage. This new charter for
"Hunter Disen" is only expected to commence in November. Period
rates recently agreed are still much lower compared to what the
market experienced in Q2 2020. Back then, the new built "Hunter
Disen" was reported to have been fixed at about USD 60,000 per day
to Trafigura.
In terms of newbuildings available in the market, the list of
available units looks rather tight, with the last few ships left
recently rumoured to have been fixed at levels close to USD 40,000
per day. Demand for shipping for VLCCs has dropped since OPEC+
agreed to proceed with production cuts after May.
Seasonality analysis for top three routes of VLCC
segment in b/d
