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Wednesday, December 13, 2017

The nature of the VLCC market

The tanker market at the start of 2005 has been better than expected in particular for the VLCCs.

The VLCC market is now quite different from what it used to be when more of the VLCC trade went AG-West, and ownership was more fragmented.

Many VLCCs mainly operate in shuttle runs - Japanese, Chinese and Korean VLCCs shuttle oil to their respective countries most of the time and are not open in the spot market. Middle East-owned VLCCs are basically controlled by the Middle East oil producers and are not open in the spot market either. In addition some 16% of VLCCs are controlled directly by the charterers. This leaves 43% of VLCCs on the spot market – but this is a market where two large operators together control 17% of the whole VLCC fleet but 36% of spot market VLCCs.

This is not the only issue that makes the market different and more difficult to analyse. If we look at the VLCCs left in the spot market after taking out the two largest operators, more than half of them are single hull units, which most of the time have to wait for cargo until the double hulls have been fixed.

VLCC fixtures with February laycan from the Persian Gulf have so far hit the highest number recorded for any February since 2000, which partly explains the high rates during the first part of February.

The number of VLCC fixtures within any given month ex AG/Red Sea

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

2001

108

95

107

105

94

79

99

100

86

94

83

83

1,133

2002

87

70

82

73

78

64

76

74

77

92

79

88

940

2003

98

96

100

94

100

93

103

94

106

90

102

97

1,173

2004

100

102

107

105

110

104

108

103

110

105

107

111

1,272

2005

112

95

95

103

110

101

109

106

103

106

108

91

1,239

2006

102

104

 

 

 

 

 

 

 

 

 

 

206

Average

101

94

98

96

98

88

99

95

96

97

96

94

1,156

Source: MST database managed for DVB Bank N.V.

Tanker Fleet (m dwt)

Segment

2002

2003

2004

2005

2006

2007

2008+

VLCC

61.1

62.1

65.8

70.9

76.4

80.1

81.6

Suezmax

14.7

16.3

16.5

19.1

20.0

22.4

23.4

Aframax

59.4

62.5

62.5

68.4

73.3

76.8

80.1

Panamamax

43.5

45.7

45.7

49.4

53.2

57.6

58.3

10-60,000

125.9

131.4

131.3

139.8

149.5

158.4

167.2

Source: Clarkson Research

Contact: Erik Ranheim