In International Shipping News 11/07/2016
Source: Reuters
Freight rates for VLCCs are set to slide further next week as charterers complete the July loading program from the Middle East, and many ships chase too little cargo, ship brokers said.
“Ship owners are trying to hold rates around 40 points on the Worldscale level, but they are struggling,” a European supertanker broker said on Friday.
Rates from the Middle East to Japan have fallen by about 6 Worldscale points since June 28, equivalent to a drop in earnings of more than $6,000 per day, according to freight data on the Reuters Eikon terminal.
Charter rates from West Africa to China have been more resilient, falling by 3 Worldscale points between June 24 and Thursday.
“There is a bit of resistance from owners of modern ships against charterers pushing rates lower. But there are a lot of ships out there,” the broker added.
Brokers estimated there could be 10-15 cargoes remaining for July loading in the Middle East before charterers released August cargoes.
“It will be at least a week before the August program starts by which time owners will start getting really nervous (about rates levels),” the broker said.
However, bad weather in China could cause port congestion that may disrupt sailing schedules and help support freight rates as charterers fix replacement tonnage for delayed vessels.
“The (tonnage) list still looks ample for the current cargo flow, however with more delays in China and (the) expected typhoon to hit south China next week, things might turn for owners,” Norwegian ship broker Fearnley said in a note on Wednesday.
“But for now the summer months are really taking a toll on the market leaving it soft for the time being,” the Fearnley note added.
That came as Japan’s Showa Shell Sekiyu KK said on Friday it planned to refine 3 percent less crude oil in the third quarter due to slower domestic demand between July-September, compared with the same period a year earlier.
VLCC rates from the Middle East to Japan were around W42.50 on Thursday, down from W45.50 last week, equivalent to earnings of $24,313 per day. That’s close to the lowest since June 22.
Average charter rates on the MidEast-Japan route fell 19.9 percent to $50,800 per day in the first half of this year compared with the same period in 2015, shipbroker Banchero Costa said in a quarterly crude tanker report on Thursday.
Charter rates for VLCCs from West Africa to China fell to W49.75 on Thursday, from W51.75 the same day last week, the lowest since June 21.
Rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia slipped to W95 on Thursday from W96.75 last week on slightly higher vessel supply, brokers said.
Source: Reuters
