VLCC rates set to fall on lower cargo volumes

Freight rates for very large crude carriers (VLCCs) on key Asian routes are set to slide next week on dearth of new open market cargoes and increased tonnage supply, brokers said. Charterers are pushing rates down by negotiating with individual owners in off-market deals rather than seeking open market offers, a Singapore VLCC ship broker said on Friday.
Freight rates are also coming under pressure from older VLCCs and supertankers coming out of dry dock for immediate employment, the broker said. "It's been pretty grim all week," the broker said. Charter rates from the Middle East to Asia have fallen 11 points on the Worldscale measure since hitting W72 on June 12, equivalent to a drop in earnings of $15,000 per day, data from Reuters and British shipping services firm Clarkson showed.
But rates are still higher than a year earlier when lease prices were around W48, according to Reuters chartering data. "Charterers have regained the driving seat and have managed to soften the rates as much of the activity has been done well under the surface," Norwegian shipbroker Fearnley said in a note on Wednesday.
Around 90 VLCC fixtures from the Middle East to Asia have been concluded for July loading compared with the average 120 monthly fixtures this year, the Singapore broker added. Rates from West Africa to Asia have also fallen as ship owners await the release of the August fixture programme from charterers. VLCC rates for the benchmark route from the Middle East to Japan fell to W61 on Thursday, against W65.50 a week ago. Supertanker rates from West Africa to China were around W63.5 on Thursday, down from W68 last week.
Charter rates for 80,000-tonne Aframax tankers remained close to near eight-year highs on Friday as traders took ships on short-term charter to store fuel oil, a Singapore ship broker said. Shipbrokers estimated that at least 28 tankers have been hired on short-term charters around Singapore. Rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia fell to around W174.5 on Thursday, against W182 last week and down from W190 on June 22, the highest since August 2008 and equivalent to earnings of almost $69,000 per day. "There are just a couple of times in a ship owner's lifetime the market is this high," a Singapore tanker broker said. Clean tanker rates from Singapore to Japan were unchanged at around W139 on Thursday, a Singapore clean tanker broker said.