VLCC rates on key routes out of the Persian Gulf have taken a hit, declining considerably this week on dull demand for tonnage, renegotiations for UAE stems for the first decade of January and lackluster activity due to the holiday season.
Rates started to fall from Monday, breaking a week-long rising streak. Some charterers and brokers now say that there is even a possibility of freight declining below the w60 level.
The benchmark Persian Gulf-Japan VLCC rate was assessed at w63.5 on Friday last week, but is now being indicated around w60. Charterers said they were paying around $17.67/mt for hiring VLCCs on the route, down from $18.70/mt a week earlier.
"We will try to fix a VLCC vessel today [Thursday] or tomorrow [Friday] for loading [in the Persian Gulf] in the first decade of January and have another chartering window open for the second decade," a Japanese charterer source said. VLCC rates are expected to remain at current levels till early next week, the source said.
The order books for this year are not closed as yet and there are still two-four cargoes to be fixed on the Persian Gulf-East route for the January 8-10 loading window, said a Taiwanese charterer.
The rate was rising for most of last week in anticipation of upcoming business for the end-December and early-January loading window but with the market witnessing a quiet period due to the holiday season, the VLCC segment has came under downward pressure.
The renegotiation of UAE crude stems by Asian refiners has delayed the chartering of vessels, market participants said. So far, 34 VLCC cargoes have been fixed for loading out of the Persian Gulf for January dates while close to 101 cargoes are outstanding, according to a note from a derivatives broker.
Supply of VLCCs in the region for the next four weeks is estimated at 86 vessels, up from 79 on Monday, the note said.
"According to the monthly activity, the fixture count so far is too small and we hope it will improve after the refiners coordinate the combination of ship-arrival dates in the Persian Gulf and coverage of tonnage," a source with a shipowner said. Some of the fixtures will now be done only after the holiday season, a broker in Tokyo said.
Asian VLCC brokers and charterers estimate between 10 and 15 cargoes outstanding for the first decade of January.
"Across the board, most tonnage has already been covered privately for early January for Aframaxes, Suezmaxes and VLCCs. There are only a few charterers who are now waiting," a broker in Singapore said.
Charterers have carried over cargoes to next year due to high offer levels from the owners, said a source with an Aframax owner.
The charterer source with the Taiwanese refiner said requirements for the first decade of January were covered and rates could decline to around w58-w59 in the next few days. "Initially there were a lot of cargoes [this month] but many were part of own programs of refiners resulting in a decline in rates," he added.
Among fresh VLCC fixtures reported in the market, China National Offshore Oil Company took the Brightoil Galaxy and Day Harvest hired New Vista this week at w60 for a January 6-8 loading at Basrah, basis 270,000 mt and 265,000 mt, respectively.
Rates started to fall from Monday, breaking a week-long rising streak. Some charterers and brokers now say that there is even a possibility of freight declining below the w60 level.
The benchmark Persian Gulf-Japan VLCC rate was assessed at w63.5 on Friday last week, but is now being indicated around w60. Charterers said they were paying around $17.67/mt for hiring VLCCs on the route, down from $18.70/mt a week earlier.
"We will try to fix a VLCC vessel today [Thursday] or tomorrow [Friday] for loading [in the Persian Gulf] in the first decade of January and have another chartering window open for the second decade," a Japanese charterer source said. VLCC rates are expected to remain at current levels till early next week, the source said.
The order books for this year are not closed as yet and there are still two-four cargoes to be fixed on the Persian Gulf-East route for the January 8-10 loading window, said a Taiwanese charterer.
The rate was rising for most of last week in anticipation of upcoming business for the end-December and early-January loading window but with the market witnessing a quiet period due to the holiday season, the VLCC segment has came under downward pressure.
The renegotiation of UAE crude stems by Asian refiners has delayed the chartering of vessels, market participants said. So far, 34 VLCC cargoes have been fixed for loading out of the Persian Gulf for January dates while close to 101 cargoes are outstanding, according to a note from a derivatives broker.
Supply of VLCCs in the region for the next four weeks is estimated at 86 vessels, up from 79 on Monday, the note said.
"According to the monthly activity, the fixture count so far is too small and we hope it will improve after the refiners coordinate the combination of ship-arrival dates in the Persian Gulf and coverage of tonnage," a source with a shipowner said. Some of the fixtures will now be done only after the holiday season, a broker in Tokyo said.
Asian VLCC brokers and charterers estimate between 10 and 15 cargoes outstanding for the first decade of January.
"Across the board, most tonnage has already been covered privately for early January for Aframaxes, Suezmaxes and VLCCs. There are only a few charterers who are now waiting," a broker in Singapore said.
Charterers have carried over cargoes to next year due to high offer levels from the owners, said a source with an Aframax owner.
The charterer source with the Taiwanese refiner said requirements for the first decade of January were covered and rates could decline to around w58-w59 in the next few days. "Initially there were a lot of cargoes [this month] but many were part of own programs of refiners resulting in a decline in rates," he added.
Among fresh VLCC fixtures reported in the market, China National Offshore Oil Company took the Brightoil Galaxy and Day Harvest hired New Vista this week at w60 for a January 6-8 loading at Basrah, basis 270,000 mt and 265,000 mt, respectively.