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There were some marginal improvements observed in the last
couple of weeks in freight rates for VLCCs, supported by steady
charterer interest and a slight increase in activity in the
Atlantic. However, this alone cannot push the freight market levels
much higher, at least for now. Once again, volatility seems to have
stacked around USD 10,000 per day for VLCCs, exactly as it happened
a year ago. We are still only a couple of thousand above this
year's lows and much lower than the average earnings of the first
quarter.
In the Middle East Gulf, last VLCCs heading to Asia have been
fixed around WS43 which translates into daily rates of about USD
13,200 for China or USD 16,500 for Singapore. More charterers seem
to have been active in this region lately, with Chinese and
Taiwanese names absorbing most volumes, with South Korea and
Singapore still maintaining their market shares for late April
loadings.
The balance across the market seems to have been supported due
to several ballasters switching back to the Atlantic, with fresh
cargoes announced in the US Gulf and Brazil, while West Africa
remained almost muted. Overall, overcapacity is still there for
VLCCs, but the sentiment is now slowly starting to work in favour
of shipowners, as demand looks much stronger than earlier
anticipated. The last decade of April is now full, with at least 55
VLCCs fixed to load cargo in the Middle East Gulf. However, the
market seems to have already fixed a lot for May, with the first
decade of May already standing at 39 liftings, with four more
liftings fixed so far for the second decade. This might not prove
enough though, since more fixtures recently agreed caused more
ballasters to approach the American coast wishing to secure
employment even if they must wait a week.
TD3C will most probably not manage to surpass WS45 in April,
levels last seen in late March. It's been of great interest that
shipments to South Korea have been fixed at a discount relative to
China, typically closer to WS40. Meanwhile, some owners only agree
to carry cargo to Singapore, as they expect the performance to
improve during the next couple of weeks and therefore avoid taking
on longer voyages. This might be another sign that VLCC owners are
not willing to go any lower. Especially as West Africa performs
much better, driven by some charterers being relatively tight in
terms of loading dates, pushing overall levels higher. This made
some charterers postpone any action in the Middle East Gulf for a
couple of days, as more ballasters will be added to the list of
available vessels during the next couple of days.
It's interesting that for most of April's first decade, the VLCC
fleet has been primarily discharging cargo than loading, as data
recently made available by Commodities at Sea suggests.
Meanwhile, total volumes of crude oil carried by the VLCC fleet has
dropped significantly, currently standing closer to 600 million
barrels, much lower than the levels achieved in mid-March, when
VLCCs carried more than 650 million barrels.
Posted 24 April 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade, IHS Markit