VLCC spot rates topple from 2015 peak

Cargo activity can't catch up with holiday buildup of ships, but earnings still strong.

VLCC spot rates declined sharply Friday, adding to an already negative start for 2016 fuelled by a buildup of available ships with insufficient cargoes to clear the list.

The Baltic Exchange’s average time-charter equivalent (TCE) assessment posted a one-day plunge of nearly $9,110, or 12.5%, bringing the day rate to slightly above $63,700.

That’s a 27% swoon from the $87,200 per day average TCE on 24 December, the last trading day on the exchange before the holidays.

Still strong

But it still represents strong earnings on historical basis, with average VLCC earnings 12% higher than this time last year.

Brokerage sources said the day saw eight vessels thrown at one Middle East cargo, with an owner moving surprisingly quickly to accept the charterer’s counter offer.

That helped fuel a significant drop in th TD3 route from the Middle East to Japan, where US brokerage Charles Weber estimated a WorldScale (WS) rate of 87.5, down from WS 110 yesterday. Today’s rate represented a TCE of $80,200 per day, which is still a strong rate historically.

TD3 WorldScale rate

FridayWS 87.5
ThursdayWS 110
WednesdayWS 113
TuesdayWS 118

Source: Charles Weber

George Los, a senior market analyst at the US firm, said January started off with a slump because a buildup of available ships over the holiday period was too large to absorb the post-holiday demand from charterers.

As of yesterday, there were 20 to 25 cargoes uncovered for January, with 32 ships available.

With most of the chartering programme for January loadings complete, he said a tighter scenario should come into view once the February programme resumes and as West Africa demand rebounds and pulls vessels into that market.

“I still remain pretty optimistic that in the near term the VLCC market has some possibility for further upside,” he said.

Maran Castor fixed

On a slim list of Friday fixtures, Maran Tankers Management’s 306,000-dwt Maran Castor (built 2001) won a charter from Thai Oil to move a cargo from the Middle East to Thailand for WS 65, according to the Tankers International (TI) smartphone app.

Mercuria Energy Group fixed the 297,000-dwt Nave Photon (built 2008), which is owned by Navios Maritime but on time charter to Gunvor-controlled Clearlake, for a Middle East-to-China journey at WS70. That marked a decline from WS78 for the same route on Wednesday.

The Baltic Dirty Tanker Index slumped 27 points to 1,016 as suezmaxes dipped and aframaxes remained stable.

TRENDING TODAY

  1. Economou linked to buy number 10

    Greek shipowner's busy week continues with reported purchase of aframax resale.

  2. Iraqi oil minister vows tanker fleet renewal

    Second largest Opec oil producer to build fleet destroyed in first Persian Gulf War.

  3. Scorpio Tankers executives buy up stock

    Investment runs to beyond $4.5m and follows dividend reduction and bullish profit projections.