The cost of sending crude oil from West Africa to China on VLCCs has dropped to a six-month low due to weak export demand and a rising number of VLCC vessels, sources said.
The WAF-China VLCC route, basis 260,000 mt, was assessed at $11.42/mt on March 28, a six-month low since the route was assessed at $11.30/mt on September 13 last year, according to S&P Global Platts data.
There have been a number of fixtures at this level, including Unipec, which was heard to have BW Bauhinia on subjects at w53, which equates to $11.42/mt, for a WAF to China stem with April 26-28 loading.
Demand from Asia for heavy Angolan crude has cooled, and there is refinery maintenance coming up which might be the cause of this drop, sources said.
There have been 28 VLCC stems fixed out of West Africa for April loading dates so far, compared with 37 for all of January, according to shipbroking sources. However, the VLCC fleet has also been growing rapidly for the last year and many owners have an increasingly bearish outlook for 2017, which is not helped by the recent OPEC cuts.