VLCC market report. Jan 17, 2014.By james tweed • Jan 20th, 2014 • Category: Tankers
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An important item of market news was the announcement this week from the International Group of P&I Clubs that it intends to relax the ban on insurance for tankers shipping Iranian oil. The suspension of the insurance ban for tankers will be for 6 months in the first instance and may be extended, a spokesman for the IGP&I was reported as saying. It remains to be see what effect this will have on the spot market.
The VLCC sector led the way to stronger earnings at the end of last year, but has recently lost its way as the market moves to fixing on the 2014 worldscale rates. The end of last week saw Owners undercutting each other, and rates fell to a psychologically important level of 270 at 40 for voyages AG-East. This week started with little more than a whimper, as the supply of ex-dry dock and ageing tonnage was taken out by Asian charterers, keen to fix at these low 40 levels. As remaining tonnage in the AG was whittled away, Charterers were left with a supply of quality tonnage to cover cargoes for the last decade January. As the last cargoes for end of the month loading and the first few loading dates for February come available, so the more hard-headed of the Owners stand their ground and hold out for higher rates from Charterers.
AG/China rates rebounded late in the week to 270 at 60, basis 2014 rates, the rate at which a Chinese charterer was reported to have covered two cargoes for first decade February loading dates, clearly setting a firmer tone in the market. The jump of about 20 points since the start of the week is most unusual and is perhaps indicative of the strength we have seen in other markets. An oil major also took a ship with East and West options 280 at 38 USG 40 UKC and AG/East at 280 at 62.5. Overall, market sentiment is perhaps unsurprisingly firmer, and with Saudi stem dates now being announced and a possible scramble to fix first decade February, we may yet see the AG/East market move beyond the 60 mark.
West Africa has increasingly gained strength, pulled up in turn by a robust Suezmax market, as several oil majors continue to make enquiries for VLCCs to co-freight the million barrels stems to the West. Demand for ships before the second decade February has tightened the supply in the region, encouraging VLCCs to ballast over from Singapore.
The 30 day availability index shows 85 VLCCs arriving at Fujariah, of which 8 are over 15 years old compared to 89 last week.
The bunker price today is $618/tonne, up $4 from last week.
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