12 September 2016

Asian Tankers-VLCC Rates to Slip:

Freight rates for very large crude carriers (VLCCs), which are at or close to multi-year lows, could slip next week as too much tonnage outweighs a dearth of cargo, ship brokers said on Friday.

“Ship owners are really trying to force rates up, but charterers don’t need to rush to charter ships,” a Singapore-based VLCC broker said on Friday.

VLCC earnings have fallen to around $14,000-$17,000 a day this week on routes from the Middle East to Asia, the broker added.

This is compared with rates of more than $100,000 per day on January 1, according to chartering data from shipping services firm Clarkson.

He said around 40-45 ships are chasing 10-15 cargoes currently available in the market.

“The problem is not the lack of cargo. There are too many ships,” the broker added.

There have been around 130 fixtures to load crude oil in the Middle East in September compared with around 114 in the same period last year, the Singapore broker said.

The start of the Eid holidays next week coupled with a week-long lull before October’s Middle East loading program is released will dampen the chartering activity, causing charter rates to slip by around two or three points on the Worldscale measure, brokers said.

“There needs to be an “event” like unloading delays in Qingdao… That will bring a significant change in rates. As it is there is no real congestion, no bad weather, no ship scrapping and there are new vessel deliveries a week,” the Singapore broker said.

Delays in loading or unloading cargo reduces the number of ships available for charter, which helps to support freight rates, brokers said.

“I don’t see rates going anywhere unless we see a rush of cargoes,” a European supertanker broker said on Friday.

Delays in refinery maintenance in Asia, which is now likely to be carried out in October, could also affect the volume of cargoes heading East this month.

SK Incheon Petrochem, owned by SK Innovation, said on Friday it plans a full shutdown for maintenance from September 19 and will resume operations on October 28.

“The VLCC market in October will limp along – I don’t think you will see any improvement until November,” the Singapore-based broker added.

VLCC rates from the Middle East to Japan climbed to W34 on Thursday, up from W32.50 a week earlier, which was the lowest since August 28, 2015.

Rates for VLCCs from West Africa to China dropped to around W37.50 on Thursday, the lowest since June 6, 2014, from W39 the same day last week.

Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia fell to W60.25 on Thursday, the lowest since September 17, 2009, from around W62.75 last Thursday, on a continuing lack of cargoes, brokers said.

Source: Hellenic shipping news. 10 September 2016

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