Tanker markets have experienced a chartering spree this week on the back of Chinese importers that seek to take advantage of cheap oil.
According to market sources, at least five VLCCs and two suezmaxes were tentatively fixed on voyage charters to China in the past 24 hours, while the actual number of China-bound ships could be even larger as some fixtures did not reveal actual discharge locations.
“I feel the Chinese are getting back to normal now,” a broker said.
Northern Petroleum International reportedly booked the BP-operated, 318,900-dwt New Energy (built 2016) for loading from the Middle East Gulf between 8 and 10 May at Worldscale 195.
This was equivalent to daily earnings of $230,731 per day on a round-voyage basis, data from VLCC pool Tankers International showed.
Frontline reportedly chartered the 156,000-dwt Front Loki (built 2010) to PetroChina for a lifting from the US Gulf between 6 and 8 May at a lumpsum rate of $9.25m.
Also, ChemChina is said to have fixed Teekay’s 156,500-dwt Beijing Spirit (built 2010) for loading from Whiffen Head, Canada on 10 and 11 May for $7.1m.
Frontline declined to comment. TradeWinds has approached other charterers and ship operators for verification.
With Middle Eastern producers starting to arrange loading programmes for May, Chinese players are returning to the market for as oil prices have collapsed.
According to Reuters, the Chinese government would issue the second batch of import quota for 2020 for private refiners, which can purchase additionally 53.9m tonnes of crude from overseas suppliers.
Beijing has priced oil products domestically based on an international crude price of $40 per barrel, much higher than the current market level.
Chinese refiners would be able to make extra profits from more domestic sales, but those margins are required to be routed to a government-controlled fund.
“West Texas Intermediate collapse means US producers will look for export opportunities. They may well find a market in China,” Arctic Securities said.
“With storage space still available China is also likely to continue to add to its strategic stockpile. In sum, all good news for tanker demand.”
Aside from space allocated for strategic petroleum reserves, Kpler data shows China still has up to 181m barrels of commercial storage available.
“The downstream demand for oil products is not really robust. The return of charterers is most likely incentivised by oil price,” a Chinese owner said.
