Freight rates for very large crude carriers (VLCCs), rose to multi-month highs this week. The ship brokers said that these rates are likely to hold firm as owners tread water before the release of further Middle-East and West Africa cargoes.
Captain Ashok Sharma, managing director of broking house BRS Baxi Far East in Singapore, said that the market is taking a bit of a breather. The market is waiting for Saudi Arabian cargoes.
These are expected to be released early next week, followed by cargoes from Kuwait and the United Arab Emirates.
As per brokers and trade sources, Iraq started to release Basra cargoes although the volume of November export cargoes is likely to be slightly lower at 3.24 million barrels per day (bpd), compared with 3.28 million bpd planned for October.
Sharma estimated there were 40-45 Middle-East cargoes still to be fixed for loading in the first 10 days of November, compared with around 55 supertankers available for charter. He said that the ratio between available units and cargoes has further evened out. Owners can look forward to finishing the year with a flourish, with fundamentals having swung in their favour.
However, he said the VLCC market would not hit the highs seen late last year, when Middle East-Asia rates climbed to 90 on the Worldscale measure on Dec. 3, 2015 and W115 on Jan. 3, 2016.
The brokers said that came after Middle East-Japan rates neared W66 on Thursday, the highest since June 9, a gain of 11 Worldscale points in a week, although the pace of increase started to slow from Tuesday.
A European supertanker broker said on Friday, “I feel cargo volumes for loading in the first 10 days of November will hold the forward momentum, but I don’t think this is the start of the winter market as others believe,”.
Some owners have started to increase vessel speeds on the back of higher charter rates and lower bunker prices, the European broker said. That meant voyages could be completed quicker, which would add to the number of vessels available for charter, capping gains in freight rates.
VLCC rates from the Middle East to Japan climbed to around W65.75 on Thursday, up from around W55.50 last week, and an increase in daily earnings from $36,000 to $45,500.
Rates for VLCCs from West Africa to China surged to about W67.25 on Thursday, the highest since May 11, from W55.50 on the same day last week.
Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia rose to around W73.75 on Thursday, the highest since Aug. 8, from W65.75 last week.
Sharma said that was due to increased chartering activity as a result of more fuel oil heading from Europe to Singapore and China.
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Source: Reuters (Reporting by Keith Wallis; Editing by Subhranshu Sahu)
