Tanker charterers are seeking to secure VLCCs for longer terms as rates rise, Euronav has revealed.
The period sector is “beginning to show some positive signs of life”, the Belgian shipowner said in its second-quarter results statement.
More than 15 VLCC time charters with a duration of 12 months or more have been agreed so far in 2022, compared with just 10 in 2021.
Recent rates have been in the $35,000 to $38,000 per day range for 2021 and 2020-built ships, Euronav notes.
This compares to spot earnings so far in the third quarter averaging $12,700 per day for 47% of the owner’s VLCC days.
And terms have been rising towards three years, a sure sign that charterers expect spot rates to improve as they lock in tonnage now.
Euronav believes current counter-seasonal increases in freight rates are establishing a “potentially dynamic market” for crude transport this winter.
The International Energy Agency is expecting Chinese oil demand to increase from 14.6m barrels per day (bpd) in the second quarter of 2022 to 15.7m bpd in the three months to the end of September, and then to 15.9m bpd in the fourth quarter.
“Higher refining utilisation and the addition of new refining capacity will drive growth in the import demand,” Euronav said.
Vessel supply is also showing “supportive momentum”, the Hugo De Stoop-led company added.
Not many spare ships
The surplus number of VLCCs in the Middle East recently hit a two-year low, indicating a growing tightness in core tanker markets.
“The expectation… is that global oil demand growth will need to be satisfied by non-Opec producers in the Atlantic basin, thus driving tonne-miles further,” Euronav said.
And the US is forecast to add 1m bpd of production between now and the end of 2023, with Brazil, Canada and Guyana adding 200,000 bpd each.
Looking further ahead, the shipowner argues a fundamental data point to a sustainable recovery.
The orderbook to fleet ratios of 4.9% for VLCCs and 3.9% for suezmaxes remain at multi-year lows.
A lid is being kept on newbuildings by the higher price of a VLCC at yards, quoted at $119m now by UK shipbroker Clarksons.
Shipyards are also busy building other ship types until 2025, Euronav added.
