In International Shipping News 10/06/2015
Charterers have been making inquiries for VLCCs for WAF-UK Continent voyages over the past week, hedging against the possibility of a busy and potentially firming Suezmax market, according to shipping sources.
Traditionally West African crude cargoes are transported to the UKC on Suezmaxes, but charterers sometimes opt to use the larger VLCCs if the economics of the deal work for them, and if the discharge port is able to accommodate VLCCs.
In the past week, Total and Shell were both heard to have put VLCCs on subs for WAF-UKC voyages in the third decade of June, although the Shell deal later failed to get fully fixed.
Sources said that a heavy third decade of WAF stems could have placed strain on the WAF Suezmax list, and that transporting some cargoes on VLCCs could relieve potential upward pressure on WAF Suezmax rates.
“There have been some VLCCs fixed off forward dates for WAF-UKC at Worldscale 80 which suggests charterers see a very busy Suezmax program. It’s a hedge against a stronger Suezmax market,” said a shipbroker.
While the third decade of June is scheduled to be a heavy one for Suezmax stems, so far charterer inquiry has been slow in arriving.
“We’ve only seen eight Suezmaxes so far for the third decade. There was 22 million WAF barrels covered on VLCCs out of a total of 56 million barrels which should leave 34 Suezmax cargoes potentially. In the last couple of months though because there have been some unsold Nigerian barrels the programs have sometimes ended up being shorter than they would have seemed,” said the shipbroker.
The fact that many of the third decade cargoes have not yet been shown, and that others have gone on VLCCs has meant that Suezmax rates could actually drop slightly in the coming days.
The WAF-UK Continent route, basis 130,000 mt, was assessed unchanged at w87.5 Monday, but a ship was heard to have gone on subjects on the route on Tuesday morning at a softer w83.75.
