Spot VLCC earnings have continued to skyrocket on tightening supply-demand fundamentals entering the fourth quarter, even breaching the $100,000-per day mark in the US Gulf-South Korea trade.
Brokers reported that SK Energy provisionally chartered the 299,500-dwt Pacific M (built 2019) from Sentek Marine and Trading for loading between 10 and 14 November at a lumpsum rate of nearly $12.4m.
Equinor also provisionally booked Bahri’s the 298,900-dwt Qamran (built 2018) for loading between 15 and 20 November at $12m.
On a time charter equivalent basis, a $12m fixture is roughly equivalent to daily earnings of $104,000, based on Clarksons Platou Securities’ assessment.
Both fixtures were done at near all-time high rates on the emerging US Gulf-East Asia trade lane. A week ago, similar deals were done at about $53,200 per day.
Other routes have also recorded strong gains in earnings. Clarksons Platou assessed the Middle East-East Asia VLCC rates at $73,000 per day and the US Gulf-East Asia-Middle East Gulf triangulation rates at $95,000 per day.
On average, VLCC earnings have risen to $80,000 per day, up 62% week-on-week.
The latest rally has been triggered by Washington’s sanctions on Cosco Shipping Tanker (Dalian) Co, one of the main shipowning entities of Chinese state-linked tanker giant Cosco Shipping Energy Transportation (CSET).
With a lack of firm information on feet details of Cosco Dalian, many charterers are steering away from freight business with CSET, the world’s largest crude tanker owner by capacity, as precautionary measures.
“The Cosco issue has made everything crazy,” said an Asian broker.
Analysts suggested the removal of CSET tonnage from international trading came at a time when seasonal oil demand is increasing, while the IMO 2020 bunker rules are also expected to prompt more crude runs for production of compliant bunker fuel.
“Refinery demand remains strong as margins continue to perform well overall. In addition, the attacks on Saudi Arabia have sparked a supply diversification drive from Asian refiners seeking to reduce their exposure to that region,” Arctic Securities said.
“The result is increased demand for long haul crude from the Atlantic, particularly the US.”
With the continued de-bottlenecking of logistics infrastructure, US crude exports have continued to break new records and occasionally hit the 3m-barrel-a-day mark.
Rising period rates
Suggesting the recent bull runs are expected to last, one-year VLCC rates have risen to their highest in about four years.
Market sources suggested Al-Iraqia Shipping Services & Oil Trading (AISSOT) relet the 320,500-dwt VLCC Diyala (built 2019) to Trafigura for 12 months at between $47,000 and $48,000 per day. AISSOT had leased the ship from Greek owner Thenamaris on a long-term basis.
There were also reports that the Dubai-based operator relet the two newbuilding VLCCs it had chartered from Evalend Shipping to Koch and Trafigura for 12 months at $48,000 per day.
Separately, unconfirmed reports suggested Olympic Shipping and Management, the Onassis shipping arm, chartered the 319,900-dwt Olympic Trust (built 2010) to Koch for one year at $50,600 per day — higher than originally thought.
With scrubber technology onboard, all of the vessels will be able to continue consumption of cheaper high-sulphur fuel oil next year when the new IMO bunker rules take effect.
“Non-scrubber VLCCs would get $4,000 to $5,000 less,” said a broker, referring to one-year charters.
