Asian VLCC rates fell again, dropping 11 Worldscale points to take the cumulative decline since the beginning of the year to w53.25 amid stiff competition from owners to snap up cargoes to avoid long waiting periods for vessels heading to the Middle East.
The key Persian Gulf to Japan route for a 265,000 mt cargo has slumped by over 44% in the eight trading days so far this year, from 119.25 Worldscale points to w66 Wednesday.
The weakness in the market was writ large with charterers heard to be receiving more than 10 offers on a single cargo on the Persian Gulf to East routes.
Adding to the owners’ woes, charterers were seen replacing vessels taken for the Persian Gulf to East voyages by at least 22.5 Worldscale points below initially done levels, mainly due to the ample supply of vessels including newbuild VLCCs, older tonnage and ships that are just out of the dry dock.
“The market is dropping so quickly, much faster than I expected! There are three to four newbuild VLCCs and many owners are keen on one cargo so the market is very competitive,” said a VLCC shipowner.
“Around 40-50 vessels will roll over to the February program, and since there are lots of [competitive] vessels remaining in the market it might take some time for the market to rebound,” he added.
The drastic cut in rates was described as a “bloodbath,” and market participants said that with vessels failing, owners were under pressure as charterers expected to obtain further discounts on rates.
Among fixtures heard, Mercuria replaced the Desh Vibhor with the Ridgebury Pioneer for a PG-East voyage, loading January 15-17 at w47.5 basis 270,000 mt on 2016 Worldscale rates.
This is the fourth vessel taken by Mercuria for this cargo, at a rate significantly lower, having dropped from w75 on the DS Commander.
Shell took two SK Energy re-let vessels, the C. Vision and the Perseus Trader, on subjects for PG-Singapore voyages, loading January 25 and January 27 respectively, both at w57.5 basis 270,000 mt on 2015 Worldscale rates. Sources said Shell previously had the Front Ariake and the Nave Synergy on subjects at w80 for these cargoes.
Market participants said the lowest fixture was S-Oil having placed a newbuild ship, the Gener8 Apollo, on subjects for a PG-Onsan voyage, loading January 27-29, at w44.5 basis 274,000 mt on 2015 Worldscale rates.