VLCC Market Sees Resurgence, While Aframax Rates Remain Stagnant

By
Mfame Editor
-
22

Following a period of stagnation and missed opportunities for VLCC (Very Large Crude Carrier) owners, the market has finally become active again. This indicates a resurgence in demand and activity, even though the overall supply and demand situation had been relatively stable, reports  Fearnleys. 

VLCC

Here’s the current VLCC market situation:

  • Arabian Gulf (MEG):
    • Charterers who secured tonnage before the official Saudi stem confirmations are benefiting significantly.
    • Saudi stem confirmations have been released, creating a surge in demand and a very tight tonnage list.
    • A MEG/Korea voyage was concluded at WS 67.5, even with a vessel that wasn’t ideal, indicating strong market pressure.
    • There’s a high likelihood that rates will surpass WS 70.
  • Atlantic:
    • The Atlantic market is supported by consistent cargo flows from Brazil and West Africa.
    • The strengthening MEG market is discouraging owners from speculatively sending their vessels westward.
    • Owners are demanding premiums for longer-term commitments in the Atlantic.
  • US Gulf (USG):
    • Tariff and port charge uncertainties for Chinese ships and operators are hindering USG export cargo activity.
    • Despite this, some deals have been concluded, and TD22 rates have increased by approximately $500,000.
  • Overall:
    • The market is very favorable for owners, and they are expected to capitalize on the current conditions.
    • There is a possibility of a shift in the market.

Suezmax

Yesterday presented a seemingly calm market in the Western region. Some US Gulf cargoes were held up due to initial high price demands, but eventually, alternative options became available. A deal falling through late in the day and a new vessel entering the market for early third-decade sailings from the US Gulf provided charterers with more leverage, demonstrating that patience prevented rates from exceeding WS 90 for US Gulf to Transatlantic voyages.

Additionally, an older relet vessel reduced rates for a replacement cargo to Wilhelmshaven, settling at WS 92.5 after an initial deal was nearly finalized at WS 100. This rate could potentially attract vessels from the UK Continent to pursue US Gulf to Transatlantic cargoes, as time charter equivalent rates are now comparable across the Atlantic. It remains uncertain if other vessel owners will accept this rate. Although the available vessel list in the West is not extensive, vessels heading to West Africa from the East and others being removed from the market could indicate the end of the recent period of high rates for vessel owners.

Aframax

Here’s the current Aframax market situation:

  • Overall:
    • The market is very slow, with stagnant rates.
    • A lack of demand is leading to an abundance of prompt tonnage.
    • The natural loading window is now shifting to the 26-28 day range, with few remaining March stems.
    • The US market is showing signs of strengthening, which could lead to more tonnage ballasting away.
  • Mediterranean/Black Sea:
    • There has been some quiet activity, but a lack of consistent opportunities is preventing rates from firming.
    • The fixing window is moving from late March to early April.
    • CPC (Caspian Pipeline Consortium) activity is still low for Aframaxes.
    • Available tonnage lists and vessels from the North are keeping freight rates steady.

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Source: Fearnleys