Slim pickings for independent VLCC owners…By james tweed • May 23rd, 2014 • Category: Tankers
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There has been a distinct lack of volume in the Arabian Gulf this week with about 50 per cent of cargoes fixed under a Unipec COA, while an overhang of tonnage from a short month last month remains the major factor. There was a time when 110 cargoes per month would have meant a balanced market, but with so much capacity available on modern VLCCs, together with the amount of Chinese domestic tonnage, there are slim pickings for independent owners. This leads to intense competition for available cargoes. At the beginning of the week BP managed to shave a few points for AG/West by agreeing 280 at 23 via the Suez and 24.5 via the Cape, and this seems to be the low point down to which owners are willing to allow freight rates fall for the moment. The AG/East market was pushed to its lowest point for the year last week. It has not recovered, and in fact those levels have since been repeated. There are 16 VLCCs which can still make June 1st cancelling and with loading dates mostly now in the 5-10 June window, it is difficult to see where owners can try to exert any real pressure.
West Africa has been more lively in the Suezmax market, which led to an interesting West Africa/Brazil fixture, as the Suezmaxes got tighter, then the TI Hellas stepped in to take up the slack off June 4, lifting that and the June 8 stem 260 at 45. This has been the only real west Africa/West fixture for some time and was done mostly due to pressure from the Suezmax market. It will be interesting to see if other Suezmax charterers follow suit or if this is an exceptional case. The majority of fixtures from this area have been from Chinese charterers who managed to push freight rates down two worldscale points to 260 at 37.5 for West Africa/China.
The Indian charterers worked two cargoes out of West Africa for loading in June. IOC received up to 8 offers for their mid month enquiry and fixed an eastern ballaster at $ 3.1 Million. HPCL attracted more offers with a later cargo and pushed rates down by $50,000 on an eastern ballaster. With more activity to be seen from Indian charterers out of the region, we assess West Coast India at $ 2.85 Million and East Coast India at $3.1 Million.
It was a busier week in the Caribbean with both Indian and Chinese charterers putting ships on subs over the course of the week. The Caribs/Singapore rate settled down at $ 3.4 million. That level doesn’t leave much room for an owners’ profit…
The 30 day availability index shows 85 VLCCs arriving at Fujairah of which five are over 15 years old which compares to 80 last week. In May there were 110 fixtures which has meant that the supply versus demand balance is heavily weighted in the charterers’ favour. Levels of freight are probably about as low as owners are willing to accept in all sectors for the moment.
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