The VLCC market is experiencing a rapid decline in rates, and there are no immediate signs of improvement. Chinese charterers are increasingly turning to local shipping companies, leaving international owners with fewer options and less market transparency. This shift in dynamics gives more power to larger oil companies and traders to influence market conditions, according to Fearnleys.
VLCC
The MEG has led the downward trend, thus enticing more modern tonnage to ballast west on spec. This has added additional pressure in the Atlantic, which resulted in a 6.5-point drop for TD15 yesterday. Falling bunker prices is the only saving grace for owners right now, to the extent ships are not already filled up that is. One possible “positive” is a typhoon brewing in the East with potential port closures and delays as a result. This could trim the MEG position list somewhat further out on the curve.
Suezmax
Q4 has a distinctly Q3 feel to it which is rather unnerving considering the optimism that pervaded this segment less than a month ago. Where do we go from here? The bane of the market remains that much vilified class of vessels, well, vilified by some in the owning community who ironically TC their vessels out, that being the humble relet. With an enormous chunk of the Suezmax fleet now in the hands of oil companies, there is a natural cap on freight whilst charterers are content to profit from the delta between chartering in and out, which caps the downside to some extent (a silver lining of sorts).
For now, TD20 will do well to stay in the WS 90’s whilst MEG/East will trade WS 112.5-115 with a softer underbelly.
Aframax
After activity covering the last stems in October, the market has quietened again; the first decade in November is looking light on Aframax stems with own tonnage being programmed. With the Mediterranean and US markets also softening ballasting looks less attractive which will keep vessels in the area. On a positive note, US markets are starting to look busier again so need to watch that space.
The Mediterranean/Black Sea market experienced an inevitable correction with rates trending downwards. Weak activity in the 1st decade ex North Africa, Ceyhan, and CPC covered ahead and a lengthy tonnage list due to ballasters into the area have been the main factors. The question now is where the floor will be set, as there are still plenty of vessels seeking employment.
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Source: Fearnleys
