VLCC Market Remains Strong in Q1: Hunter

The very large crude carriers (VLCC) market market was relatively strong in Q1, with VLCC earnings averaging USD 29,000/day an increase of close to USD 20,000/day versus Q1’18, said Norway's Hunter Group ASA.

High USG activity was the main contributor to the rate increase, said the company focusing on shipping and oil services investments.

However, rates have dropped significantly towards the end of Q1 due to amongst other things; continued OPEC+ production cuts, heavy refinery maintenance ahead of IMO 2020, and a high number of newbuildings being delivered.

"We believe this trend will continue through H1. Although we expect the market to remain weak for the above-mentioned reasons until the end of H1, we believe the market will be strong in the second half of the year as refineries are expected to come back online again as maintenance is completed," it said.

"We also expect a ramp up of distillates output ahead of IMO 2020, which should be good for crude oil demand. OPEC+ may also make a comeback to cover increased refinery demand and to make up for Non-OPEC shortfalls," it added.

Finally, we believe the supply demand balance will improve significantly in favor of owners as newbuilding deliveries are expected to slow significantly, while a substantial number of vessels will be taken out of trading to install scrubbers, Hunter Group said.

Hunter has entered into eight shipbuilding contracts and four corresponding supplemental agreements for the construction and delivery of eight 300,000 DWT ECO Design Crude Oil Tankers.