Lull sees traders focus on third and fourth quarters.
SLOW trading has steadied values for tanker derivatives on the most frequently traded routes for very large crude carriers and suezmaxes.
A collapse in physical rates for VLCCs that started in early February was followed by a corresponding collapse in near-term contract values in February and March, as profit-takers sold their positions.
Futures trading had largely factored in the post-Christmas spike, and there had been little deviation in contract values further down the curve.
But with the Baltic Exchange VLCC rate on the Saudi-Arabia-Japan route (TD3) rising for the first time since January 27 yesterday, traders have turned their attention to contracts covering the third and fourth quarters of 2010.
Contracts are settled against the TD3 index. ?Quite a lot of volumes are going through in areas of the back end of the TD3 curve,? said a London-based tanker derivatives broker yesterday.
?There is a lot of interest going back and forth, whether it be hedging from the chartering side or purely speculative. We also saw some short covering as the guys who made money from the fall in the market bought back their positions.?
Third-quarter contracts were valued yesterday at W65, or $21,200 per day, based on calculations from tanker futures exchange Imarex. Fourth-quarter contracts were valued at W74.75.
This compared with W71.75 just over a month ago for the third quarter, and W74.5 for the fourth quarter.
Nevertheless, there has been little overall trading in tanker forward freight agreements this week. International Petroleum Week, a three-day industry conference in London, has dragged many participants away from their desks.
The Chinese New Year holiday, as well as national holidays in Greece and the US, also kept business quiet.
Furthermore, brokers and traders met yesterday to thrash out a standard agreed calculation for Worldscale rate assessments, as the sector steps up its drive to shift trading to dollar-per-day contracts.
The February 16 meeting in London brought together key liquidity providers in the wet paper sector, which has about 120 counterparties globally.
As a result of flat rates and holidays, little interest was reported in trading for clean contracts.
But traders hoped that the underlying physical market for suezmax tankers out of West Africa will strengthen and boost opportunities in the dirty FFA sector.
There were reports that W90 was on subjects (provisionally agreed) for the TD5 suezmax route, which was higher than the Baltic rate of W88.5 the day before.
?Charterers are happy to pay last done,? a broker said.
?Owners are trying exploit this and get some strength. As soon as that happens we will see some better support along the TD5 and TD3 curves.?