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Bleak prospects in VLCC market

Bleak prospects in VLCC market
Activity in VLCC spot markets around the world remained thin heading into the Easter weekend, keeping rates suppressed at very low levels.

Activity in VLCC spot markets around the world remained thin heading into the Easter weekend, keeping rates suppressed at very low levels.

Activity in VLCC spot markets around the world remained thin heading into the Easter weekend, keeping rates suppressed at very low levels.

Some MEG-East routes had already broken the WS 30 floor while the West African market softened further to WS 42 from WS 45.

The benchmark MEG-UKC route for MEG-West voyages was still flat around WS 23 with average earnings last week of some $11,000 per day per vessel.

The benchmark MEG-Korea route was pegged around WS 27 with average earnings last week of some $14,000 per day per vessel.

Average cash break-even earnings for the VLCC spot market is below $25,000 per day per vessel, but break-even rates are calculated differently across the industry, with some companies like Frontline Ltd. reporting its break-even rate as high as $34,700 per VLCC.

According to Bassøe MEG-East voyages are currently fetching rates ?we have not seen for almost 10 years?.

"The Atlantic on the other hand is still a better place to be, but a steady flow of ballasters from the east has already affected the rates here as well"?With increased bunker prices the daily results are down to a bare $10,000 pd [per day per vessel] level,? it said.

Looking ahead ?there are bleak prospects for VLCCs in the MEG with no immediate recovery on the horizon,? Bassøe said.

?The Atlantic on the other hand is still a better place to be, but a steady flow of ballasters from the east has already affected the rates here as well,? it added.

Fearnleys told that the total number of cargoes lifted in the MEG declined by 20% in March compared with January.

Charterers have been feeding their requirements to the markets in 'slow-release mode' and there is more than enough tonnage currently available.

They are all in agreement that vessel over-supply was building up on the 'twin effects' of OPEC export reductions and declining demand, with no real positive factor in sight to 'mop up' the excess tonnage.

?OPEC is supposedly trying its best to cut 4.2 million barrels per day (bpd) from the market. Full compliance is equivalent to at least two VLCCs out of a job every day,? said one broker.

Meanwhile, the Paris-based International Energy Agency (IEA) has revised its 2009 global oil demand further downwards by 1 million barrels per day (bpd).

Its latest Oil market Report now pegs 2009 global oil demand at 83.4 million bpd, a 2.4 million bpd drop from 2008 global oil demand levels.

The downward revision was based on a ?reassessment of GDP assumptions" and much lower than expected demand data for the first quarter of this year.

www.TurkishMaritime.com.tr

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