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Saturday, December 16, 2017

Market boost for VLCCs

VLCC freight rates have shot up, reaching the highest level since 2005.

 

 

 The reason could be that the availability of VLCCs in the Persian Gulf has dried up. Where have all the single hull VLCCs gone?  Are they all queuing up to be converted?  We are hearing about some 50 sold for conversion, but far fewer have actually started the conversion process.

 

 

According to Lloyd’s List, DnB Nor Markets have said that rates of W130 on the trip to the east - which translates to around USD 90,000 per day - were mainly due to a squeeze for second decade December stems, which has boosted sentiment. But DnB Nor warned: "More vessels are available for the third decade, which could halt rate movements next week."

 

Single-hulled units are also enjoying the party and are attracting up to W110 for a trip to the east. "In retrospect, the potential for a sharp upward correction was always there as the market had been rising on thinning availability and steady demand," said EA Gibson. "It only then took one lucky fixture on an awkward position to allow owners to expand their ambitions and call for much higher levels."  Charterers seemed to respond rapidly by moving into the market place on forward dates. However, even with some consolidation expected in positions, rates are likely to stay at unexpectedly higher levels through December, commented EA Gibson.

 

  

U.S. stock levels are substantially below year-ago levels, and the tanker market is expected to see more activity throughout the winter, which will continue into the spring as import and inventory requirements increase.

 

Contact: Erik Ranheim