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Braemar Seascope Issues Weekly Chartering Report for Wet Trades

By MarEx 2012-11-20 16:38:00

VLCC

VLCC owners in the Arabian Gulf are starting to take notice of the rising bunker price and managing to push rates marginally upwards. Many owners at this stage have decided not to work available cargoes because the rates were simply too low. Stubborn charterers have been able to use older, less well approved units rather than pay the required premium for more modern vessels. As the week progressed, cargoes have attracted numerous offers but most in the hope that the weaker vessels will desist in jumping on an early counter. There have been signs that some charterers have decided to fix forward cargo positions covering any possible upside to the market at the end of the 2nd decade of September. There is a general feeling that there could be some upward movement in the market, not because of any demand issue but simply owners unwilling to accept prevailing rates.

West Africa has been more subdued this week with a few cargoes being quoted and again a gentle drift upwards in rates. However a burgeoning tonnage list means that any reasonable gains are either eaten up but the cost of bunkers or aggressively pursued by owners looking for a realistic income. Sadly neither the AG nor West Africa can be said to offer that. The Indian charterers have fixed Caribbean/west coast India off mid/September at US$3m and just below, US$2.8m for West Africa/west coast India. We are currently rating West Africa/east coast India at low US$3m level.

The 30 day availability index shows 55 VLCCs arriving at Fujairah, of which, seven are over 15 years old compared to last week’s total of 60. It’s purely supply vs demand which is keeping rates low and only a significant increase in cargoes coming from the Arabian Gulf or an owners hiatus on fixing will change the status quo. So far the first decade of September, only 25 fixtures have been recorded, this is of great concern for owners because this will mean 20 VLCCs will remain into the 2nd decade.

The freight rate for 280,000mt AG/US Gulf is ws23.0, same as last week. With bunkers currently at US$692/tonne, up US$10.5/tonne, owners' earnings are:

  • Round Trip Cape Laden/Suez Ballast US$ -21,000/day (US$ -20,000/day last week)*

The freight rate for 270,000mt AG/S Korea is ws36.0, down ws0.5pts from last week, making owners' earnings:

  • Round Trip Ras Tanura/Ulsan US$ -5,100/day (US$ -3,400/day last week)*

*Obviously with slow steaming these daily earnings can be improved.

View the entire report here.