VLCC Rates Uncertain, Charterers Battle Over Cargo

Rates for very large crude carriers (VLCCs) on key Asian routes face an uncertain week as owners seek to push for higher rates, while charterers could cap fixture activity to cool the recent spike in prices, brokers said.

That came as VLCC rates from the Middle East and West Africa to Asia hit the highest level since mid-February on Thursday in a flurry of activity that saw around 50 VLCC fixtures concluded since April 7, Reuters freight data show.

"There's certainly been a bit of a surge. I can't really call whether the market will rock on," said one Singapore-based VLCC broker on Friday.

"If another 20 cargoes come out it'll rock on," he said. But if the total fixtures for April is similar to previous months the rally would peter out quickly, he added.

While the number of VLCCs available for charter fell considerably in the last week, the Singapore broker only saw around 10 cargoes still to be fixed to complete April's fixtures.

The deluge of cargo fixtures was fuelled by the Easter holidays, which left charterers with a short window to charter tankers to load by April-end, brokers said.

"Owners (are) clearly seeing an opportunity to add to the present firm undertones, but again the total volumes for the month will be the deciding factor whether further upside could be in the cards," Norwegian ship broker Fearnley said in a note on Wednesday.

VLCC rates for the benchmark route from the Middle East to Japan climbed to around W59.5 on the Worldscale measure on Thursday, up from W51 a week earlier and the highest since Feb. 13.

Supertanker rates from West Africa to China surged to W60.5 on Thursday, up from W51 last week and the highest since Feb. 12.

Rates for 80,000-ton Aframax tankers from Southeast Asia to East Coast Australia fell to W99 on Thursday, compared with around W102 last week.

Rates have been sliding since March 25, although the pace is easing, Reuters freight data showed.

Clean tanker rates from Singapore to Japan fell to around W140 on Thursday, from around W143 a week ago, as cargo volumes eased due to refinery maintenance in north Asia, a Singapore clean tanker broker said.

Rates are likely to plateau or move sideways next week, the broker said.