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Tonnage lists show 30% fewer VLCC’s at Fujairah in the next month than last week. Can rates respond?

By • Sep 20th, 2013 • Category: Tankers

The Coracle tanker market podcast for Sep 20, 2013 in association with Braemar-Seascope

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Thanks for downloading the VLCC Tanker Market report podcast from Coracle and Braemar Seascope for September 20th 2013.

There was a certain amount of hope at the beginning of this week that perhaps, with a concerted effort, VLCC owners might be
able to pull together and push rates out of the abysmal 270 at 33 AG/East towards 35 and eventually into meagre profit. Alas, the independent owner’s worst enemy, the oil company relet, did their best to scupper their chances. The hope started when Exxon paid a premium 270 at 34 for an AG/Singapore cargo but it turned out there was a complicated loading arrangement, however this did give owners signs for encouragement. A couple of China bound cargoes then entered the market and while those independents were pushing for 35, oil company controlled tonnage fixed 270 at 33.75 then 34.

An AG/Thailand fixture was done off market 270 at 35 but this seems to be as high as things will go, since the sheer availability of tonnage will always be the deciding factor no matter how severe the cargo congestion situation becomes. A hollow victory for owners moving rates up from 270 at 33 to 35 for AG/East over the week but in terms of earnings, we are still below operating costs.

AG/West has not been so busy, although Statoil fixed 280 at 22 via Suez and 23 via the Cape of Good Hope, which is actually slightly under last done levels.

West Africa has been quieter for Chinese destined cargoes; however, the freight rates have remained steady despite slight firming in the Arabian Gulf. The fixing dates are now for the last decade in October and being fixed at 260 at 35 West Africa/China. Very little has been fixed to the west and the poor Suezmax market has meant that the economics just don’t stack up. So far for the month, we have counted 11 VLCC fixtures and 14 Suezmax fixtures from the area, making a total of 42 million barrels of stems lifted.

The Indian charterers were quiet out of West Africa this week. The lack of activity is contributing to low volumes seen out of West Africa this month and is also due to annual maintenance of refineries. We expect the Indian charterers to have at least a couple of stems in the last decade of October, which we expect will be worked in the following week. We are assessing West Africa/west coast India at $3.15m and West Africa/east coast India at $3.4m.

There was very limited action from Continental Europe; however, we understand a number of Handymax and Panamax vessels have been fixed with fuel oil into the Skaw area. So perhaps we might be able to see a VLCC size stem fixed Continent/Singapore. Charterers have started searching for early October lifting dates for Caribbean/Far East and freight rates of $3.35m-$3.4m being reported.

The 30-day availability index shows 56 VLCC’s arriving at Fujairah of which six are over 15 years old, this compares to last week’s count of 70, thus in theory we there are 30% less ships on this list compared to a similar stage of last week. Certainly, the large volume of cargoes fixed at the end of last month will have contributed to the reduction of available tonnage and these volumes need to be maintained to start any feasible recover in the VLCC spot market.

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