- VLCC deals being concluded privately.
- Older tonnage allegedly moving sanctioned oil, delaying scrappage.
- Freight rates yet to improve amid recovery in oil demand.
A Platts news by Vickey Du and Arveen Rajula states that VLCC fixtures shrouded in secrecy in ailing tanker market.
VLCC market deals all private
A mostly transparent VLCC market is witnessing an increase in deals being concluded privately.
As a dismal freight market is offering charterers the luxury to quietly pick and choose their preferred owners as well as keep fixtures under wraps.
The weakness permeating the current supertanker market is such that for every VLCC-sized cargo quoted, there are more than 10 offers, shipping sources said.
Charterers have the luxury
The competition to snap up cargoes has given charterers the luxury to choose between quoting the cargo in the open market.
They can go directly to their preferred owners to bargain for the rate they want, a source said.
Excess tonnage supply hurting
The surplus tonnage supply is exacerbating the weakness in the crude tanker market.
The slow demolition of older tonnage as well as ships returning from storage business is adding to the supply side.
From a peak of around 232 million barrels last June, the total volume of crude in floating storage have declined to 87 million barrels in June 2021, according to data intelligence firm, Kpler.
What does the Platts data show?
Freight rates have gone south with the benchmark Persian Gulf-China 270,000 mt VLCC route averaging $6.10/mt in the last five trading months, Platts data showed.
In 2019 and 2020, it averaged $12.50/mt and $13.40/mt, respectively.
The VLCC market had a firm run in 2019 due to the sanctions the US had imposed on China’s Cosco Shipping, which resulted in 5% of the global fleet being unable to trade.
The support in 2020 came in the form of floating storage demand after global oil demand was slashed by 9.1 million b/d because of the COVID-19 pandemic.
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Source: Platts
