The VLCC market has shown slight improvements recently, with rates for the Middle East Gulf (MEG) to East route currently around WS 52.5, and West Africa to East rates in the mid WS 50s. Falling oil prices have helped support more West-to-East runs, though these are yet to fully materialize. Activity this week was influenced heavily by private deals in Dubai, with owners strategically releasing rate information to encourage a rate increase. However, the market remains below the typical strong winter level, and owners aim to push rates further up before the year-end holiday season.
Suezmax: Facing Headwinds
The Suezmax market in Q4 has faced challenges, with disappointing rates due to limited visible activity and competition from VLCCs taking on co-loaded West Africa deals. TD20 routes last traded at WS 77.5, likely close to the current floor for the period. The MEG/East route is expected to be priced slightly below WS 100, while Botswana to the UK Continent (BOT/UKCM) via the Cape of Good Hope (COGH) should remain in the WS 50s. The Suezmax sector is thus seeing limited optimism, with opaque off-market moves hindering rate transparency.
Aframax: Stability Amid Low Activity
Aframax rates have been stable but with minimal market movement. The North Sea market has low activity, and deals are primarily private, with available tonnage keeping the market balanced. In the Mediterranean, the situation mirrors the North Sea, with slow activity and a balanced tonnage list. Rates are largely at previously set levels, with an increase in cargo needed to prompt any upward movement. The US market has softened, drawing vessels from the North Sea due to low activity there.
Rates Summary (Spot WS Rates)
- MEG/West (280′): WS 33.5 (+4.5)
- MEG/Japan (280′): WS 52.5 (+2.5)
- MEG/Singapore (280′): WS 53.5 (+2.5)
- West Africa/Far East (260′): WS 55 (+2)
- West Africa/USAC (130′): WS 77.5 (-10)
- Sidi Kerir/West Med (135′): WS 77.5 (-7.5)
- North Africa/EuroMed (80′): WS 120 (0)
- UK Continent (UKC): WS 125 (-2.5)
- Caribbean/US Gulf (Caribs/USG): WS 102.5 (-37.5)
1-Year Time Charter (T/C) Rates (USD/Day)
- VLCC (Modern): $38,500 (no change)
- Suezmax (Modern): $40,000 (no change)
- Aframax (Modern): $41,000 (no change)
VLCC Fleet Activity
- Fixed in all areas last week: 52 vessels (-1 from last week)
- Available in MEG over the next 30 days: 117 vessels (-13 from last week)
Key Takeaways
- The VLCC market is showing mild improvement but remains shy of winter peaks.
- Suezmax activity remains subdued with minimal visible upside due to VLCC competition.
- Aframax rates are steady with low market activity in the North Sea and Mediterranean.
- The market awaits additional cargo to boost demand and potentially drive rate increases.
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Source: Fearnleys
