Charter rates for VLCCs continue to surge, jumping from over $200,000 to an astonishing $300,000 per day today, as yet another tanker explosion turbocharges the market's recent bull run.
Tanker market sources said the Euronav's 318,376-dwt Ingrid (built 2012) has been fixed 'on subs' by Idemitsu at Worldscale 280 for a voyage from the Middle East Gulf to Japan. It equates to an actual time charter equivalent (TCE) rate of $301,219 including idle days, according to VLCC Chartering.
Showing the volatility of the market, the fixture was reported at 11.55 am this morning, with the vessel having been reportedly fixed earlier at 10.38 am at Worldscale 240.
“What looked a good fixture in the morning is being surpassed by the afternoon,” one source said. “It’s a dangerous place to be out there.”
By early afternoon, Euronav's Tankers UK operation was reported to have fixed the 298,642-dwt Ardeche (built 2017) to ExxonMobil for a Middle East Gulf to Singapore voyage at Worldscale 325.
Earlier, Dynacom's 296,793-dwt Evgenia I (built 2011) has fixed by BP for a voyage from the Middle East Gulf to East Asia at Worldscale 240, equating to an actual TCE rate of $219,235 including idle days.
And the Angelicoussis Group's 320,513-dwt Maran Capricorn (built 2008) has reportedly gone to Glencore's ST Shipping also at Worldscale 240, which equates to an actual TCE of $261,433 including idle days.
A day ago, TRF Shipmanagement reportedly chartered the 297,600-dwt Houston (built 2017) to Singapore Petroleum Corp on the same route at WS205.
Among other fixtures reported this morning are the Maria P Lemos which has gone to Petroineos at Worldscale 240 from West Africa to China, and the Front Endurance at Worldscale 178 from the Middle East Gulf to the UK/North Continent for Stasco (Shell).
The actual TCE for the fixture - although at a lower worldscale number - is $216,421 per day. The Frontline tanker was last fixed in August at Worldscale 29.
On the Baltic Exchange, the benchmark TCE for Middle East-China was assessed at $300,391 per day as of Friday afternoon, up $142,361 from Thursday.
Average suezmax TCE increased by $15,746 to $136,633 per day, while average aframax TCE rose by $3,557 to $58,632 per day.
The rising rates came amid renewed geopolitical tension as Iran claimed one of its tankers was set on fire in a "terrorist attack" off Saudi Arabia on Friday.
According to ISNA news agency, National Tranian Tanker Co’s suezmax Sabiti (built 1999) suffered severe damage to two tanks and oil had spilled into the Red Sea.
"This adds more fuel to the fire," another source said.
Clarksons Platou Securities said: "This is yet another event shaking the market, which is likely to make risk premiums in the region rise again."
Perfect storm
The first source described at least six VLCCs have left drydocks which they were due to enter for planned exhaust gas scrubber-fittings, or turned around before reaching them, for high-paying fixtures.
One tanker owner said that with a scrubber fitting taking around 35 days, missing out on potential earnings of $200,000-per-day-plus effectively meant turning down around $7m in earnings. "Few owners are going to want to do that," he said.
Large tanker players described the market as “total chaos” this morning and "beyond belief", as tensions and rates ratcheted up another gear in the wake of Iranian tanker explosion.
“There have been high expectations of the market for some time but different reasons,” said one player, citing the incoming IMO 2020 1 January deadline on sulphur emissions and increasing US exports and the seasonal upturn.
But he said new drivers such as the ship attacks in the Middle East Gulf, the Venezuela clause situation, vessels storing 2020-compliant fuel and the US sanctions against Cosco have ramped up the pressure.
“It’s not one thing, it’s cumulative,” he said, adding that despite the current rate surge the overall market backdrop does not look particularly positive.
But he added: “Watch out for the next six months. It’s going to be a wild old ride.”
