In International Shipping News 18/03/2017
Freight rates for very large crude carriers (VLCCs) are likely to remain under pressure with hire rates from the Middle East to Asia tracking lower in the face of excess tonnage in the market, brokers said.
Cuts in the output from Iraq and West Africa this month as part of an agreement between oil producers to curb crude production to bolster oil prices are also expected to weigh on the tanker market as the number of voyages are curtailed, brokers said.
“Older, cheaper ships are workable out of the Middle East rather than West Africa, that’s why we see slightly higher rates from West Africa,” said Ashok Sharma, managing director of ship broker BRS Baxi in Singapore.
Typically, shipowners discount rates for older vessels, while oil majors in West Africa limit charters to more modern ships.
Supertanker charter rates have diverged over the last week with prices from the Middle East to Asia nudging lower while freight rates from West Africa climbed to their highest since Feb. 28.
“The disparity in rates between modern and old ships remains while rates for the longer voyages like West Africa/East have been better maintained,” said Norwegian ship broker Fearnley in a note on Wednesday.
“Elsewhere, it’s subdued with ample tonnage and rates are likely to remain under pressure for the time being,” the Fearnley note added.
That came as loading schedules from Basra suggested that crude exports from the Iraq port could fall by more than 600,000 barrels per day in March, BMI Research said in a note on Wednesday.
Coincidentally, traders are shipping competitively priced crudes such as Russian Urals, Kazakhstan’s CPC Blend, North Sea Forties and U.S. West Texas Intermediate to replace Middle East staples.
“There is a fair amount of oil from the North Sea to Asia,” Sharma said.
Crude volumes loaded from Angola in March could also fall to around 1.5 million barrels per day, against 1.6 million barrels per day in January, the BMI note added.
“However, initial loading data for April suggest that this will reverse with crude loading rising back up to 1.7 mbd,” BMI said.
VLCC rates on the Middle East-to-Japan route dropped to around 54.74 on the Worldscale measure on Thursday, from W56 last week. Time charter earnings are around $21,935 per day, virtually flat from last week.
Rates on the West Africa-to-China route rose to around W62.75 on Thursday from W59.50 on the same day last week. Rates hit W63.25 on Wednesday, the highest since Feb. 28.
Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia surged to W138.75 on Thursday from last week’s W113.75 on tighter tonnage supply, a Singapore clean tanker broker said.
Rates are equivalent to $19,903 per day, the highest since Dec. 15.
Source: Reuters (Reporting by Keith Wallis; Editing by Sherry Jacob-Phillips)
