Fixture rates for East of Suez VLCC tankers strengthened above the Worldscale 40 mark for the first time since the end of January, S&P Platts data showed, following a pick-up in chartering activity, weather delays in North Asia and stronger owner sentiment after news of increased scrapping, said market sources.
The key Persian Gulf-Japan rate first dipped below w40 January 30, down to a low of w34. On Tuesday the key VLCC PG-Japan rate was assessed up w4 to w41, basis 265,000 mt, according to Platts data.
This boosted owner sentiment, although market sources said the upswing would be kept in check by long tonnage availability in the PG region.
“The uptick in rates will be limited, it will stop somewhere before the mid-April activity as the overall tonnage is very much over-supplied. There were some delays in the Far East, and even though the scrapping number is minor, it still had some influence on owner sentiment,” said a charterer.
A VLCC shipowner said: “The VLCC PG-China rate could be in the mid-w40s now, because the market firmed by w3.5 points overnight, so it is not far-fetched for it to firm another w3.5 points.”
Chartering activity picked up for cargoes loading in the first decade of April and 19 fixtures were heard so far this week. In addition, another handful of VLCCs were heard on subjects with no further details.
Bad weather in northern Asia late last week delayed VLCCs in key discharging ports, said shipping sources.
On the scrapping side, up to 15 VLCC tankers were heard sold for demolition in 2018, said market sources.
In fixtures heard on the day, Unipec placed the Elizabeth I.A. on subjects for a PG-China voyage, loading April 5-7, at w41.5 basis 270,000 mt. Unipec was also heard to have placed the Olympic Loyalty II on subjects for a similar voyage, loading April 6-8, at w41.5 basis 270,000 mt. Previously, the fixture rate level seen for the PG-China voyage was w38 basis 270,000 mt.
Market sources said rates could firm further in the short term due to the continued activity.
“Yes i think the market could go higher today. There are several cargoes working tonight and I think modern owners will ask more than last done,” said a VLCC shipbroker.