Two Norwegian-linked VLCCs have reportedly been fixed on short charters at firm rates even though spot earnings are falling to their lowest level in 16 months.
Brokers reported Trafigura chartered the 299,999-dwt Eco Queen (built 2016) from Oslo-based Awilco Eco Tankers for six months at $30,000 per day.
The trading house was also said to have taken the 320,013-dwt DHT Peony (built 2011) from DHT Holdings, whose main chartering desk is in Norway, for three to six months at $35,000 per day.
The deals for the scrubber-fitted tonnage were reported over the past week. Trafigura and Awilco declined to comment while DHT has not responded to an email seeking verification.
The reported rates are far above spot VLCC earnings, which have continued their recent slide due to worsening oversupply.
“I see the period market ‘on thin ice’ and about to break any moment,” brokerage Alibra Shipping director Giuseppe Rosano said.
“Personally I do not see rates holding at these levels much longer if the demand does not improve.”
The Baltic Exchange assessed spot earnings on the benchmark Middle East Gulf-China route at $9,068 per day on Monday, down 41% over the past week.
This was the first time the TD3C earnings dropped below the $10,000-per-day mark since May 2019.
Tankers International data showed Cosco Shipping Energy Transportation’s 297,300-dwt Xin Han Yang (built 2009) was tentatively fixed by S-Oil at Worldscale 24, the lowest for similar trades in recent months.
The ship is scheduled to lift a Middle Eastern crude cargo between 13 and 15 September for a voyage to South Korea.
Analysts have attributed the bearishness to slow activity on main trading lanes, despite Opec and its Russia-led allies nominally hiking crude production since August amid a gradual recovery in oil demand.
“The tanker market is oversupplied with vessels but the world is becoming undersupplied with oil. That is the on-going battle with the former still in charge,” Arctic Securities said in a note.
“Better compliance by Opec, compounded by the group’s exports lagging production, is delaying any rise in activity…Saudi Arabia and United Arab Emirates did raise production but much was offset by higher compliance in Iraq and, particularly, Nigeria.”
Fearnley Securities has counted just slightly more than 40 VLCC cargoes from the MEG so far this month. Normal export volume is about 130 to 140 cargoes.
Meanwhile, Clarksons Platou Securities has warned of increased vessel supply due to easing congestion in China.
The investment bank estimated 53 VLCCs in port congestion as of Wednesday, down from 61 last week.
“There is more tonnage released into spot trading at a time when the cargo volume is low,” said a tanker owner.
