VLCC spot rates surged to the highest level since an October spike, as tanker owners held onto the driver's seat in a hot market.
A Maran Tankers Management ship fetched a rate of WorldScale 170 on a trip from the Middle East Gulf to Thailand, which marked a staggering surge from WS 105 on the same route earlier in the day.
The journey for the 317,000-dwt Maran Antares (built 2012), which utilises low sulphur fuel oil, equates to a round-voyage time-charter equivalent (TCE) rate of $190,000 per day, according to Tankers International. Actual earnings, given the ship's starting point at at Sikka, India, amounted to whopping $300,000.
Thai oil company PTT booked the vessel, but the deal is understood to be on subjects, according to Tankers International.
The frothy rate came as the Baltic Exchange data showed TCE earnings on the benchmark Middle East-to-China route more than doubled in one day to $166,000 per day, the highest level in five months.
The surge came after TradeWinds reported earlier today that Saudi shipowner Bahri led a raid on the large tanker market, forging charters for at least 18 VLCCs.
"The control of the market is firmly in the hands of the owners," said Howe Robinson, a tanker broker.
"After they drove the market so firmly upwards yesterday, charterers have not stopped to take a breath and, in the hope of comparative advantage, they continued to take ships at the end of March with some reaching out into April stems."
The rises are expected to continue on the near term.
"This flood of activity does not look like abating right away and is now supporting substantial rate increases in the western hemisphere as owners demand firmer rates to compensate them for longer voyages," Howe Robinson said.
The excitement filtered down into other tanker segments, although the rates gains were smaller.
The Baltic Exchange cited average suezmax TCE rates at $45,751 per day Wednesday, which marked a one-day gain of 54.7%.
Huge scope for VLCC demand
Fearnley Securities said the VLCC market "pretty much sold out" on Wednesday, with rates rising nearly $100,000 over the day.
It quoted West Africa to China rates at $145,000 per day, all driven by Bahri's fixing spurt.
It said that six of these vessels will travel to the US Gulf.
"The kingdom has already flagged that production will be 12.3m barrels per day in April, 25% higher than in February.
"Should all this end up for exports, it would create incremental demand for as much as 60 VLCCs," it added.
"In addition, ADNOC has flagged an increase from 3m bpd to in excess of 4m bpd, with further plans for an expansion to 5m bpd."
Fearnley said: "In effect; everyone is now scrambling for tonnage. We have now recorded 88 MEG cargoes over the last week, driving down the MEG VLCC availability list to 115 vessels for the next 30 days, down from 149 in mid-February," Fearnley analysts said.
"The forward curve also creates floating storage enquiries, with negotiations for six months charters in the range of $35,000 to $40,000 per day, supported by a $3-4 per barrel contango."
