Caution. If you’re squeamish about falling tanker rates, don’t listen.By james tweed • May 16th, 2014 • Category: Tankers
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The headline for this week’s report is that we have seen the lowest AG/East VLCC fixture reported so far for 2014. Taking into account the differences in worldscale from last year to this, it is roughly equal to the lowest level reached last year. 270 at 33 is on subs for loading Basrah, which should give the owner a certain amount of demurrage, and discharging in South Korea with a laycan of June 2nd. This voyage will give a daily return of approximately $ 5-6,000/day, substantially below the operating costs of a modern VLCC, and this excludes any waiting time. This month has been rather short of cargoes, and now the tonnage is building up. The fixture that we just talked about had 13 offers recorded, while even less popular, shorter runs are attracting up to 8 offers. We haven’t quite reached the point at which shorter voyages become more popular than longer ones as owners try to reposition their ships later in the month in the hope of improved freight rates.
AG/West has slipped down to 280 at 25 and with the Caribbean market at just $ 3.4 million. This means that those looking to triangulate can only manage a return of about $ 15,000/day over three months.
Freight rates from West Africa have also come under pressure, in line with the pressure being applied in the Arabian Gulf. The week started with freight rates dipping below the 260 at 40 mark. Rates dropped to 37.5 and charterers are pushing hard to reduce levels further.
The 30 day availability index shows 80 VLCCs arriving at Fujairah, of which two are over 15 years compared to approximately 95 vessels last week. May is looking very low on volume with a total of 107 fixtures so far, 33 in the first decade, 32 in the second decade and 42 so far in the third. We are starting to run out of cargoes in the Arabian Gulf for the month, and we are now moving into early June laycans, which is causing downward pressure on freight rates and tonnage to build up to record levels in the area. It will take some time to work through this excess of ships, so we do not expect any improvement in the area for the moment.
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