Freight rates for very large crude carriers (VLCCs), surged to a four-month high on last Thursday. The ship brokers said that the new rates have to hold steady as ship owners await the release of November cargoes.
A European supertanker broker said on Friday that there is a power struggle going on between owners and charterers. Few charters were done on Thursday. There are no fresh cargoes out of the Middle East Gulf.
The broker said that it came as rates surged 10 points on the Worldscale measure in one day, equivalent to a more than $10,000 increase in daily earnings.
According to chartering data on the Reuters Eikon terminal, the daily earnings are up by more than $16,000 in a week on VLCC charters from the Middle East to Asia.
Shipping experts observed that with average breakeven costs of around $21,000-$22,000 per day, supertanker owners are now making a profit after Middle East-to-Asia earnings climbed to around $36,000 a day. Next week should be quiet because owners are waiting for the Saudi Arabia cargoes.
The ship brokers also said that, however, charterers may also release November cargoes early to secure vessels in the face of tight tonnage supply. A European shipbroker said that the rates could take a breather or roar. That came as VLCC soared to the highest level since mid-June, fuelled by a record number of VLCC tanker fixtures from West Africa and a raft of charters by Unipec, the trading arm of China’s Sinopec.
The first European supertanker broker said that there were 33 VLCC cargoes from West Africa for October loading – that’s a monthly record. That came after Shell lifted force majeure on Bonny light crude exports coupled with an increase in exports of Qua Iboe crude oil from Nigeria.
The broker further said that the Chinese have been buying a lot of oil ahead of a probable rise in prices. Unipec has taken a lot of cargoes from the Middle East Gulf and West Africa, which is what’s pushing the market.
VLCC rates from the Middle East to Japan surged to around W55.50 on Thursday, from W38.25 last week, the highest since June 10. That was an increase in daily earnings from $19,961 to $36,000. Rates for VLCCs from West Africa to China climbed to W55.50 on Thursday, against W50 on the same day last week.
Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia were almost unchanged around W65.75 on last Thursday, from W66.75 previous week.
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Source: Reuters (Reporting by Keith Wallis)
