Asia VLCCs Face Pressure of Low Rates
Rates for very large crude carriers (VLCCs) on key Asian routes will face further pressure next week even as owners resist attempts to push rates lower, brokers said.
Ship owners were showing a united front to keep rates above 50 on the Worldscale measure from the Middle East to Asia, a Singapore-based VLCC broker said on Friday.
"Nobody is doing anything below W50. Owners are keeping numbers up," the broker said.
Oil majors including Chevron, Shell and BP had all chartered VLCCs at freight rates above W50 this week, Reuters freight data showed.
But the broker questioned how long ship owners could stop rates falling as the amount of available tonnage is increasing. "Owners seem to be in order now ... but there are plenty of ships," said the broker. There are now around 20 VLCCs available for charter for the Middle East-Asia route, he said.
The cargo fixture program for loading in March had been largely completed with 123 charters fixtures, "more than recently expected," Norwegian ship broker Fearnley said in a weekly note on Wednesday.
"(Vessel) supply for the first half of April is nevertheless ample and charterers will remain in the driving seat (so) we will see further softening to the market," Fearnley said.
VLCC rates from the Middle East have been generally sliding from W70 - hit on Jan. 16 - although with a short rebound in mid-March.
VLCC rates for the benchmark route from the Middle East to Japan slipped to W49.50 on Thursday, down from W52 last week. This was based on a single charter, though, while the prevailing rate remained above W50, Reuters data showed.
Cargo volumes and the demand for ships were just not enough to support the Middle East rates, the Singapore broker said.
For West Africa to Asia, cargo volumes were steadier, but the rates were still under pressure. West Africa to China fell to around W51 on Thursday, against W53.50 a week ago.
In other trades, rates for 80,000-ton Aframax tankers from Southeast Asia to East Coast Australia continued to climb, rising to W105 on Thursday, against W101 a week earlier on tighter tonnage supply.
Clean tanker rates from Singapore to Japan also continued to surge on a shortage of ships and healthy cargo volumes. Rates rose to W157 on Thursday, up from W124.50 last week and the highest since April 2013.
Copyright Reuters 2015.