Marinav News

Tanker rates have continued to rise against all expectations into the summer months, doubling the cost of transporting oil this year, but a lull is expected. By May brokers expected key Middle Eastern two million barrel VLCC rates to plateau, but instead they kept on climbing. Worldscale 90 to the U.S. Gulf is now the norm for modern ships, up from W85 a month ago and W42.5 at the beginning of the year. The irresistible rise has more than doubled the cost of transporting oil to about $2.10 per barrel, from 99 cents at the beginning of January, according to broker Mallory, Jones, Lynch, Flynn & Associates (MJLF). Likewise, eastbound rates have jumped to W112.5 for Japan from W100 and W52.5, respectively, taking the shipment price per barrel to $1.65 from 75 cents in early January.

Middle East to Asia bound very large crude carrier (VLCC) rates have hit to a new record high beyond the psychological barrier of W200, brokers said on Tuesday. Indonesian oil major Pertamina paid W205 to fix the C Navigator for a 245,000 ton cargo going East at the end of November, but that peak was above the current market, brokers said. "Remember this is a small cargo, so the rate is higher than the usual VLCC rate," said one Oslo-based tanker broker. "The ship's next cargo will be 265,000 ton, and for that it has fixed at W188. The rate for 270,000 tonrs from the AG to South Korea is still in the W175-180 region." This equates to $2.4 per barrel.

Increased secrecy in the tanker chartering market may be pushing rates lower, even though many brokers and owners like the idea of doing private business. Although it has always been a secretive business where only a portion of trading was made public, shipping sources say more and more tanker chartering is being done directly through a single broker rather than being put out to tender. However, ship owners and some brokers say charterers are able to dictate rates because they have more information about cargo and ship availability and can influence the perception of supply and demand. Despite this, most tanker brokers generally prefer private business even if it means they cannot compete for some cargoes.

Insurers should control the ship safety classification process in the light of weaknesses exposed by the Erika’s loss, a senior tanker broker said. Insurance companies should hold the mandate over who inspected vessels’ structural conditions and passed them as safe, an official at Marinav Shipping and Trading said. Since insurers pay out the claim, it is therefore in their best interest to ensure that the vessel is maintained so that risk is minimized, the broker said. The current system is flawed because ship owners appoint the inspectors and can apply pressure to receive “flexible” treatment in return for retaining their business, he said…

Freight rates for crude tankers loading early April in the Middle East were climbing early last week as shipowners held out for higher prices in expectation of heavy vessel fixing, brokers said. VLCC rates to the U.S. Gulf were expected to rise five or more Worldscale points to W62.5-65 ($10.75 per ton) for the next done fixture, some brokers said. Japan shipment prices were also lifting with the latest bookings at W70 ($7.50 per ton), up from W67.5 in the week before. "We believe this week will be heavy for one reason alone, there will be placement of barrels West to alleviate the shortage that the U.S. market is stressing," broker Marinav Shipping & Trading forecast in its March 13 report.