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Rise in VLCC pushes rates

Rise in VLCC pushes rates
The number of very large crude carriers chartered on the spot market for March loadings closed at 107 yesterday ? 23 more than the same month in 2009, and just under the 108 reported in March 2007.

Rise in VLCC charters pushes rates near $60,000 per day.

Spike sees charterers pay a premium on spot market to cover loading dates at end of month.

The number of very large crude carriers chartered on the spot market for March loadings closed at 107 yesterday ? 23 more than the same month in 2009, and just under the 108 reported in March 2007.

The spike in March loadings saw charterers pay a premium to cover dates for the final days of the month, thinning out tonnage available for the first 10 days of April.

As a result, daily earnings for VLCCs shipping crude from the Middle East Gulf to Asia are nearing $60,000, and are up 48% since March 1 on the major index route from Saudi Arabia to Japan.

But rates remain soft for Atlantic trading, with VLCCs heading west to the US recording lesser gains, to hit nearly $26,000 per day. Brokers said westbound rates might improve as high distillate draws motivate refiners to increase runs in the US.

So far, some 16 VLCCs have been booked to c over cargoes for the first 10 days of April. Another 30 are expected to come into the market over the next week for this time period, one broker reported, with two VLCCs already booked for later loadings.

?Right now owners have the upper hand, and are holding back ? there are quite a few cargoes in the market, and they"re not giving any numbers easily right now,? said a broker in Greece.

?We"re not seeing anything above W100 but the trend is going up.?

The broker was referring to Frontline"s 1999-built, 311,168 dwt Front Commander , chartered by Shell at W100 to load 270,000 tonnes of crude at Basrah, Iraq on March 30, heading for Mailiao, Taiwan.

Another broker said the rate was actually a little lower at W98-W99. But the market keenly awaited news of subsequent fixtures to get a handle on how steeply rates were accelerating.

?Charterers don"t want to move right now as the market is changing,? said one broker.

?There are five to six cargoes out there right now. Imagine if there were more in the market, then it would be a bloodbath. If in the next week there is some panic with some charterers and others coming in, then we will see some activity.?

Another broker also said owners might break ranks and accept rates charterers were offering, which were the highest available since early February.

?I think today will see owners probably go maybe just a tad below W100 and charterers aim for W95,? he said of rates expectations on the Middle East Gulf to Asia route.

China was also active, booking VLCCs from West Africa. CNOOC took the 1995-built, 300,299 dwt Maran Centaurus at W78.5, shipping 260,000 tonnes to China, with two other cargoes currently sought by other Chinese oil traders, brokers said.

Norwegian tanker shipping exchange Imarex estimated that 48 VLCCs from the global fleet of 541 would be coming available over the next four weeks. For loadings from April 1-10 there were 29-35 VLCCs coming available for an estimated 24 cargoes, Imarex estimated.

All together between 52-67 VLCCs looked to be seeking employment from now until April 20. Imarex estimated a further 28 available cargoes would come into the market for April 10-20 loading dates.

With tonnage looking thin, one broker said South Korean oil company SK put one of its own ships into the market to try and alleviate the pressure.

?So we might see more oil company relets pushed in so the lists look longer, but we"ve only seen that done once so far,? he said.

Adding to pressure is the looming Easter break, which might force charterers to sort out cover before London brokers take a four-day holiday.

Also cited as positive fundamentals for the tanker market was the Opec meeting yesterday, which voted to keep output steady for the fifth consecutive period.


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