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VLCC rates fails to pick up

VLCC rates fails to pick up
VLCC spot rates on most routes have weakened after an expected surge in activity last week with players returning from International Petroleum Week failed to materialise.

VLCC spot rates on most routes have weakened after an expected surge in activity last week with players returning from International Petroleum Week failed to materialise.

VLCC spot rates on most routes have weakened after an expected surge in activity last week with players returning from International Petroleum Week failed to materialise.

Brokers reported between WS 47 and WS 48 for double hull MEG-East VLCC voyages fixed last week, down from the average WS 50 done during IP week February 16-20.

?What was expected to be a busier week for VLCCs in the Middle East Gulf [MEG] turned out to be a week of only modest activity,? said Gibson last Friday.

Double hull MEG-West voyages sank to WS 37.5 from WS 40 while single hull MEG-East fixtures were also being done at WS 37.5, brokers said.

Fixtures to move West African crude oil to the US Gulf stayed flat at WS 52.5.

In terms of earnings, Bassøe said that ?owners are still making decent returns,? with benchmark routes MEG-Korea and Bonny-LOOP both garnering average earnings just below $50,000 per day per vessel.

Brokers told that 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 to be as high as $34,700 per VLCC.

According to one analyst, ?it all depends on how break-even is calculated. It can cover operating costs, which are around $8,700 per day, but could be much higher if it covers capital costs.?

Looking ahead, Gibson expects ?activity should, belatedly, pick up... and new opportunities will present themselves.?

Gibson however warned that ?whether owners will convert those into gains is quite another matter.?

Increased activity might not push up rates if there is more than ample tonnage available to soak up requirements, a situation which would leave the advantage in negotiations in the hands of the charterers.

Other brokers have expressed surprise that activity was low last week, given the IP week factor and the fact that the March cargo programme is running at less than half of its normal rate according to one.

According to Bloomberg reports, falling global oil demand and OPEC supply cuts are the reasons for this slowdown in activity in the VLCC spot markets.

It quoted a broker saying that at present ?there are more ships fighting for each cargo."

www.TurkishMaritime.com.tr

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