Rates for very large crude carriers have bounced off nearly two year lows as charterers begin preferring bigger ships over suezmax tankers.
VLCC spot rates from the Middle East to the Far East, which bottomed out at just under $7,800 per day last week, are now just over $10,500 per day, according to Baltic Exchange assessments. Rates had not been at those lows since October 2014.
The rise in VLCCs rates follows after the nearly six-fold increase in suezmax rates to $39,000 per day over the second half of September. That rate surged in the wake of a resumption of some Nigerian crude streams, supporting Atlantic Basin tanker markets. Suezmax spot rates have since eased to around $35,700 per day, according to Baltic assessments.
After that rate surge, charterers are now doubling up cargoes on the larger VLCCs, according to MJLF researcher Court Smith, which sees the recent rally in suezmax tanker rates as mostly done in the short term.
“People are loading VLCCs, which has modestly helped VLCC rates, but is hurting suezmaxes,”
Echoing those sentiments, Robin Heath, head of chartering for Diamond S Shipping, which has 10 suezmaxes with another two for delivery, said the bigger ships are a constant thorn in the side of the suezmax markets, especially when they enjoy a strong market.
“VLCCs could be a great source of irritation, a real killjoy,” Heath told an audience at the Association of Ship Brokers and Agents meeting in Miami. “VLCCs have also struggled in recent time so owners of the big boys are very keen to spoil any party plans that lowly suezmax owners have."
Nevertheless, “it will take more than a few VLCCs to spoil my fun,” he added.
