Asia Tankers-VLCC rates seen flat or lower as tonnage outpaces cargo volumes
SINGAPORE - Freight rates on key Asian trades for very large crude carriers (VLCCs), which have fallen from a five-year high in early October, could drop further next week on excess tonnage supply and lower cargo volumes, ship brokers said on Friday.
“There’s no upside,” said a Singapore based VLCC broker on Friday.
“Rates will either be flat or on the downside. There are many more ships than cargo,” the broker said.
While ship owners and charterers are expected to conclude more charters later on Friday, “charterers may hold back until next week on the expectation rates could fall,” the broker said.
With rates from the Middle East to Japan around 62 on the Worldscale measure, the broker thought shipowners would try to resist charterers pushing rates much below W60.
Around 24 supertanker cargoes have been fixed to load crude from the Middle East in the first 10 days in November, against 127 for the whole of October, brokers said.
“The start of the November (loading) programme in the Middle East has been very slow and volumes are lagging way behind the activity we saw at the start in October,” Norwegian ship broker Fearnley said in a note on Wednesday.
“Rates have come under heavy downward pressure and have corrected down sharply for all destinations,” Fearnley said.
Supertanker earnings are down to around $60,000-$70,000 a day, down from a peak of $111,450 a day on Oct. 8 when Unipec fixed the 318,430 dwt (deadweight tonne) TI Topaz, the highest rate since June 2010, according to ship brokers and Reuters freight data.
“Returns remain healthy, though a far cry for the previous peak. Tonnage has built up and we would require sharply increased volumes for an extended period of time to absorb the present oversupply, both in the Middle East and also in West Africa,” Fearnley said.
Freight rates for the Middle East to Japan benchmark route fell to W61.50 on Thursday, down from W80 last week, and the lowest since Sept. 16.
VLCC rates from West Africa to China dropped to their lowest since Sept. 28 at around W67 on Thursday, against W80 the same day last week.
Rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia remained flat at around W93 on Thursday.
Clean tanker rates from Singapore to Japan dropped to W115 on Thursday, down from W119 last week and the lowest since Oct. 29, 2014, on thin cargo volumes and excess tonnage, a clean tanker broker said on Friday.
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