In International Shipping News 27/07/2016
Source: Platts
Heavy vessel supply coupled with a steady flow of new-building VLCCs, especially in the second half of this year, adding to the position lists caused the key VLCC Persian Gulf-Japan freight rate drop to its lowest so far this year of 40.5 Worldscale points basis 265,000 mt Tuesday.
On the day, the VLCC PG-Japan rate was assessed down w1.5 at w40.5, and was last assessed at this rate on June 22, Platts data showed.
Since then the price was unable to climb enough to touch w50, and was mostly in the low w40 range.
Market sources said the latest East-bound VLCC fixture was S-Oil had placed the 2000-built, DS Valentia, on subjects for a PG-Onsan voyage, loading August 11-13, at w35 basis 274,000 mt. The rate was discounted as the vessel was older than 15 years, sources added.
Demand from cargoes for June and July were robust, with 132 heard counted for June at 137 counted for July, compared to April and May which both saw 128 cargoes, said sources.
Sentiment was mixed on whether the VLCC market had now bottomed out.
While some sources said that owners of modern well approved VLCCs would resist at the psychological barrier of w40 basis 270,000 mt, but others said that continuous addition of vessel supply from newbuildings would push rates down.
“We have about six newbuild VLCCs per month coming for the rest of the year so that is going to be no help,” a Singapore-based VLCC broker said.
Newbuilding vessels lack full approvals and typically discount on their first voyage, sources said.
“I heard some shipowners showed below w40 last night [for the S-Oil cargo],” a VLCC shipowner said.
VLCC owners’ earnings on Persian Gulf to North Asia routes are close to $20,000/day, according industry estimates.
A broker said that at w37.5 for a Ras Tanura-Ulsan voyage, earnings would be $18,900 a day.
Source: Platts
