What effect does Chinese New Year have on the VLCC tanker market? Podcast 24 JanBy james tweed • Jan 24th, 2014 • Category: Tankers
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The week started with very strong, positive sentiment for ship owners and a voracious Suezmax market tempting VLCC’s to ballast to West Africa for Western destinations. There was also an expectation of a rush of AG/China cargoes, as Chinese charterers cleared their desks before Chinese New Year, and a lack of overhang of tonnage. This seems like the prefect recipe for an upward move in rates, however this hasn’t materialised. Over the week freight rates moved quickly from 270 at 60 AG/East to 270 at 70, however having reached these heights, owners found it difficult to turn down the money on the table and push to 80. Who can blame the owners for cashing in while the rates are good? AG/West has been more subdued and charterers fixing early February dates have had to face rates as high as 270 at 41.5 for US Gulf and 43.5 for UK Cont via the Suez canal. Many of the cargoes fixed have been with East and West options whilst the majority of fixtures concluded to the West for early February were covered before the recent spike.
West Africa has been very busy over the past week, with Suezmax charterers taking coverage on VLCC’s for the 2nd decade of February. Rates started at 260 at 70 for West Africa/UK Continent and quickly rose to 80. The highest fixture reported so far is 260 at 87.5 for West Africa/UK Continent, but it remains to be seen if that deal will get subjects given the now softening Suezmax market. West Africa/East charterers were cushioned, as they were still looking for end February loading dates, and have been able to entice vessels ballasting from the East. Rates began the week moving up from 260 at 55 and finished 260 at 67.5. There is a feeling that the peak has now passed.
In the Caribbean we have seen increased activity this week, mainly within the second decade February liftings, with rates being edged up due to the bullish sentiment in West Africa. As the week comes to the close rates have settled down.
The sentiment up on the Continent remains high due to the lack of vessels available up to the end of February, however with the co-freighting of Suezmax cargoes in West Africa we do expect an increase of ships arriving early March and falling Suezmax rates may lead to a diminishing sentiment next week.
The 30 day availability index shows 75 VLCCs arriving at Fujairah, of which five are over 15 years old – compared to 85 last week. With approximately 35 cargoes now covered for 1st decade February and an availability of 16 vessels up to the 9th February in Fujairah, the outstanding five or so cargoes yet to cover should be able to pick off tonnage as sentiment begins to weaken. Some of the second decade Chinese contract liftings have been announced before their New Year break, and the availability count looks to be around the 40 ship mark, up to and including 20th February. This looks adequate at this stage and Charterers seem far more relaxed this week compared to last.
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