VLCC spot rates forced down as charterers hold back April loads
Charterers put pressure on spot rates for very large crude carriers transporting crude oil from the Middle East to Asia by holding back cargoes with loading dates in mid-April.
After fixing 34 VLCCs to load cargoes in the first 10 days of April, oil traders had backed away from the spot market this week to create a quiet period that would force owners to lower rate expectations.
Daily earnings for VLCC shipping Middle East crude to Asia fell by nearly a third from the six-week high of nearly $60,000 last week to around $39,500 yesterday.
Spot rates for VLCCs taking Middle East crude to east Asia dipped below W80 for the first time for nearly three weeks. S Oil fixed the 2000-built, 299,999 dwt Delta Millennium at W79.5 after receiving six other offers. A Norway-based broker said charterers would claim this as a benchmark for what rates they expect to pay.
?It has been very slow and owners" confidence has been eroded. The tonnage list has not changed a lot, but there is a slower pace of inquiry. It could be a ploy or a bluff by charterers, or physical lack of demand. But owners do not take well to long periods of inactivity,? said broker Halvor Ellefsen of Norway"s Sealeague.
London-based brokers predicted rates would continue falling as more VLCCs were made available.
?We expect rates to soften unless the lower rates bring out a rush of inquiry into the market,? said an SSY Futures broker.
Rival broker ICAP Shipping said: ?There appears to be sufficient tonnage before the end of April, and it will be a challenge for owners to maintain current levels?.
But an Imarex Asia tanker derivatives broker said: ?I don"t think charterers will wait that long to start fixing more second decade [April 11-20] cargoes. We will probably see another two or three days of slower pace, but it has to pick up eventually.?
Imarex said 34 VLCCs had been fixed so far for April Middle East loadings, which means another 55 should be needed to cover the rest of the expected cargoes. It estimated 50 VLCCs of a global fleet of 543 would be available over the next four weeks.
Rates were also sliding in the Atlantic trading region due to lack of inquiry. The only transatlantic VLCC business reported yesterday was US-based Conoco fixing the 2000-built, 299,089 dwt Songa Julie at a rate of W81.5 to ship West African crude to the US Gulf. This is down from W95 for similar voyages two weeks ago.