A division of China Merchants Energy Shipping looks to have secured long-term business for one of its VLCCs in a deal which has the market pondering if the summer momentum has been maintained.
CPC Corp of Twiwan has booked a vessel from CMES company Associated Maritime on a three year contract, brokers say.
It comes at time of strong sentiment in the tanker market in the buildup to IMO 2020 and a series of time charters which have shown strong rates over longer periods.
Brokers reported the non-scrubber-fitted VLCC will collect between $35,000 and $35,500 per day, not too far from the present level available in the spot market.
However, with the identity of the specific Associated Maritime tanker to fill the contract not yet clear, brokers are unsure what the transaction indicates for the market.
“If the VLCC is an eco ship, then this can be seen as a cheap rate for such a ship,” Braemar ACM said in a note.
“Yet if it is for a conventional VLCC, then the rate is an expensive one.”
“It is possible that the ship is a semi eco.”
Based on the charterer’s requirement, TradeWinds understands the ship would be built no earlier than 2012. The two companies are still finalising the deal and the ship’s name is yet to be known.
One tanker market analyst contacted by TradeWinds described the fixture as "pretty standard" in terms of the rate on offer but logical given all the talk of the market heading into a fresh super-cycle.
Based on Poten & Partners’ latest assessments, the three-year rate for an eco VLCC is $37,500 per day while that for a non-eco vessel is $34,000 per day.
Affinity (Shipping) placed the three-year time-charter rate for a VLCC at $32,000 per day.
This compares with the $27,464 per day average over that period in the year-to-date, according to data from Clarksons.
An email seeking comments from Associated Maritime has not been responded at the time of writing.
“This ship is to replace the lone VLCC in CPC’s timechartered fleet, which will be re-delivered to its owner in the near future,” said a source familiar with the tender.
“CPC uses its timechartered VLCC fleet to carry crude into Taiwan…the requirement is often just one ship,” said the source.
The company operates two oil refineries in Taoyuan and Dalin with a combined capacity of 500,000 barrels per day.
With CMES and CPC both being state-linked entities, the impending deal has raised some eyebrows.
“It would be very funny if [Taiwanese and Chinese] state-owned enterprises cooperate,” said a broker.
However, the tender does not have explicit nationality restriction, and the two sides have been involved in charter business in the past.
Previously, CPC fixed a three-year charter with CMES for the 299,000-dwt New Spirit (built 2005) in 2015.
The deal was reportedly done at $39,000 per day with options for period extension.
As TradeWinds has reported, the tanker period market has come to life in the past couple of months ahead of the arrival of IMO 2020 legislation which is expected to disrupt the market.
In May Mercuria snapped up Enesel's 319,000-dwt Maria P Lemos (built 2018), one of its scrubber-fitted eco newbuildings, for three years at a rate of $43,500 per day.
It was the highest rate seen for a VLCC over that period for around four years.
