Freight rates on Asian routes for very large crude carriers (VLCCs) are set to climb higher next week as unloading delays and weather-related port congestion in China tighten vessel supply on strong chartering activity, brokers said on Thursday.
“The market is pretty hot. I don’t think rates will climb into the sky, but there is a little bit more upside,” a Singapore VLCC broker said on Thursday.
That came as charter rates from the Middle East to China climbed by 14 Worldscale points in the week to March 9, Thomson Reuters chartering data showed. That is a jump in daily earnings of around $12,670.
“Basra cargoes normally come out on the 12th of the month. If they come out tomorrow then there is a W10 point upside potential,” a European supertanker broker said.
That would be equivalent to a $9,000 per day increase in charter rates, Thomson Reuters data showed.
“It is severely busy – March is coming out as a big month with around 130 Middle East fixtures. There are hardly any ships left,” the European broker said.
“Rates from West Africa are heading in the same direction. Many charterers are looking very forward on rates,” fixing vessels now on the expectation rates could climb further, the broker said.
Bad weather in China, which led to the temporary closure of some ports to supertankers this week, coupled with ullage issues, have disrupted sailing schedules and tightened the number of tankers available for charter later this month.
“Dalian was closed on Tuesday. Ningbo was closed for two or three days. It’s nothing dramatic, but it does lead to a traffic jam and port congestion,” the broker said.
“Shanghai, Ningbo-Zhoushan and Dalian ports closed now due to strong winds,” a Singapore-based supertanker broker said. Shenzhen had also been affected by fog, the broker added.
The shortage of space in some partially filled storage tanks had lengthened the time it took to unload a supertanker which had added to port congestion, the European broker said.
These ullage issues caused congestion at Chinese ports in the third quarter last year, brokers said.
Freight rates for the Middle East to Japan benchmark route climbed to around W63.75 on Wednesday, up from about W50 last Wednesday.
VLCC rates from West Africa to China rose to around W64.50 on Wednesday, against about W54.75 the same day last week.
Rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia soared to W129 on Wednesday, the highest since Jan. 13, on increased chartering activity. That compared with W117 a week earlier.
Clean tanker rates from Singapore to Japan were flat at around W134 on Wednesday from about W134.50 last week.