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Update on the state of the tanker VLCC market for week ending Sep 13

By • Sep 13th, 2013 • Category: Tankers

The Coracle tanker market podcast for Sep 13, 2013 in association with Braemar-Seascope

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Over the last week it did seem that there could be a diplomatic solution to the crisis in Syria over the use of chemical weapons and the progress has already served to calm oil prices and hence bunkers prices. It has been another week when VLCC owners struggled to find employment, the rates are only earning about 50% of the cost of operating the vessel. In a shocking statistic earlier this week, we counted 70 VLCCs available which could make a cancelling date of 10th October. This is even more intimidating when you take into account that we have already counted 50 fixtures in the last decade of September with perhaps five more to cover for the month. AG/East has steadily traded at 270 at 33 for Chinese destinations and on favourable terms a point or two discount can be achieved. AG/West has been a busier route and this was reflected as rates moved gradually from 280 at 22.5 to 23.75 as those willing the lesser rates were picked off earlier leaving those requiring higher freight levels to perform the voyage.

West Africa has been slower with only a couple of fixtures reported from Chinese charterers meaning that the rates achieved at the end of last week of 260 at 36 have slipped a little to 35. Fixing dates are now around mid-October and it seems that volumes fixed generally to the east this month will be down on the last few months. Again, this market is fixing off dates which enable the use of ballasters from the east and the vast amount of tonnage which that enables especially with the current state of the market.

From the Indian charterers, it was only IOC who started working their October programme out of West Africa. They first came in to the market off 8-9 October dates for an Angola/west coast India stem for which they received up to six offers, mostly from eastern ballasters. Despite increased activity in the east for last decade September laycans, the oversupply of tonnage left owners struggling to achieve better rates than last done. This was seen when IOC covered their requirement on a eastern ballaster at
$2.625m, about $100,000 below the prevailing market levels. Charterers then entered the market off 9-10 October for an Angola followed by Nigeria to East Coast India cargo for which they received similar response. The cargo was covered by an eastern ballaster at $3.3m. The rate paid by IOC pro-rates to about worldscale 36 and the high rate can be attributed to the extra steaming incurred by the owners due to loadports being in ‘non geo-rotation’ for an eastern ballaster.

So far for the month of October, we have counted 14 million barrels lifted from West Africa, all fixed to eastern destinations on two suezmax’s and six VLCC’s. As reported by various bunker brokers there seems to be a glut of fuel oil in Singapore for the moment meaning that any owners hoping for some arbitrage movements from the Continent to the East will be disappointed until the situation changes.

The first sign of activity from the Caribbean for October dates was seen, as Indian charterers begin looking for tonnage in the first decade. Rates from this region are expected to remain relatively steady at $2.95m for west coast India discharge and $3.4m for a Singapore voyage for first half October stems.

The 30 day availability index shows 70 VLCC’s which includes eight vessels over 15 years arriving over at Fujairah compared to last weeks total of 55. As noted earlier, the influx of September cargoes means that we are estimating a total count of about 140 cargoes for the month which is an increase of 20-25 cargoes over the previous summer months. The bunker price is $602/tonne, down $6 from last week.

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