Tanker market report Mar 7By james tweed • Mar 10th, 2014 • Category: Tankers
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Recent events in the Ukraine have led to an uncertain and potentially dangerous situation in eastern Europe. Investors have reacted by moving their money into safe haven investments such as oil and gold, causing commodity prices to increase. Since then, prices have declined as governments attempt to defuse the situation. This has not affected the VLCC markets as much as it might have done if the conflict was in a different part of the world and while tonnage oversupply is still a determining factor.
The week started with rates slipping down to 270 at 51 for AG/China, with charterers looking ever stronger and the tonnage list ever longer. Adding to owners’ concerns, it was a quiet week with only about 15 market fixtures for the whole week, leaving owners with very slim pickings. Owners of well approved, modern VLCC tonnage have been able to present a united front and keep rates at about the 51 level for AG/China during most of the week, although some charterers have managed to separate the sheep from the lambs and picked off ex-dry dock tonnage at below 50.
Owners are becoming more concerned about the lack of cargoes in the AG and willing to offer a discount in order to get fixed. Charterers looking for ships for Western destinations have also been able to erode rates over the course of the week, with a couple of market quotes from 280 at 32.5 down to a very lowly 280 at 30 for AG/USG via the Cape.
The market for VLCCs loading in West Africa started the week more briskly than that of the AG, but over the course of the week, again with a lack of cargoes, owners in the Atlantic as well as those willing to ballast grew increasingly frustrated.
Charterers for West Africa/China also withdrew from the market earlier in the week sensing weakness and held off until mid week when Unipec suddenly quoted the market. It may have been a tactic designed to unsettle owners as charterers quickly received 10 offers. This in itself was enough to reduce the rates by 2 and a half points to 48.5.
From the Indian charterers there was absolute silence out of West Africa after finishing their March program last week. The tonnage list has grown and due to a lack of activity, shortly when the charterers begin working on their April program out of the region, we expect West Africa to West Coast India at $3.9m and to the East Coast at $4.15m, basis loading Nigeria.
Owners with vessels in the US Gulf have been increasingly concerned about the lack of cargoes from Venezuela to China. Without these cargoes there was very little point in fixing AG/West at the prevailing low freight rates, as they are essential to an owner’s earnings. However, these cargoes eventually entered the market last week and this week, with five ships fixed at between $4.3m and $4.75m for Caribs/Singapore voyages off the last decade of March.
The 30 day availability index shows 76 double-hull VLCCs, of which eight are more than 15 years old, arriving at Fujairah compared to last week’s total of 80 VLCCs. The total number of fixtures for March is now 71 so we do expect another 35 more stems for the month.
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