Asia Tankers-VLCC Rates Soar

Middle East VLCC rates hit $69,500 a day; daily VLCC rates average $51,000, highest since 2008 (Clarkson).

Rates for very large crude carriers (VLCCs) on a key Asian route jumped to a three-month top this week, but prices are likely to soften as charterers hold back cargoes amid a slight oversupply of tonnage, brokers said.

VLCC freight rates from the Middle East to Asia hit their highest level since the end of January this week with average earnings of around $69,500 a day, they added.

Average daily earnings for a VLCC so far this year are at around $51,000, which is the most since 2008, according to British shipping services firm Clarkson.

"Owners have had it too good for too long and they are not going to let it go," a Singapore-based VLCC broker said.

But charterers are now holding back the release of the Middle East fixture programme for the middle of May to bring down prices, brokers said.

"They will sit on it for as long as they can to take the heat out of freight rates," the supertanker broker said.

There were about 30-35 charters agreed for loading in the first 10 days of May, slightly less than average for this year.

"We see it as generally softening ... there are more ships and the charterers are taking it slow - the combo seems to be working in their favour," said another VLCC broker in Singapore.

Rates from West Africa to Asia are also likely to keep softening even as owners resist charterers attempts to push prices lower.

VLCC rates for the benchmark route from the Middle East to Japan climbed to W63.75 on the Worldscale measure on Thursday, up from W62.5 a week ago.

Supertanker rates from West Africa to China climbed close to W63 on Thursday, against W61.5 a week earlier. They hit W65 on April 20, the highest since Jan. 29.

Rates for 80,000-tonne Aframax tankers from Southeast Asia to East Coast Australia slipped to around W97 on Thursday, from W97.5 a week ago as cargo demand eased, brokers said.

Clean tanker rates from Singapore to Japan were at W139 on Thursday, against W140 last week. Rates have been level this week but could soften further on reduced cargo demand, a Singapore clean tanker broker said.
 

By Keith Wallis