Singapore (Platts)
Several owners have given out their ships at cheaper levels due to surplus availability but this has brought down the daily earnings to levels close to $8,000 which they claim is barely enough to meet their costs of operation.
The key Persian Gulf to Japan route was assessed at w36.5 March 25, a level not seen since early October. It was assessed Tuesday at w38.75. As recently as January 22, was at a two-year high of w73.
The number of fixtures for March loading in the Persian Gulf is estimated at 112, down from 133 in February, according to broker reports. Crude oil imports by Asian refiners is seen lower month on month in March, by a total volume equivalent to at least 20 VLCCs, a chartering source in north Asia said.
"There [are a lot of] choices available for charterers due to ample tonnage," said a chartering source with a Taiwanese refiner.
The four-week supply of VLCCs for loading in the Persian Gulf is now estimated at 115, up from 61 on February 17, a derivatives broker tracking the VLCC market said. "There should be more [chartering] activity today but with tonnage still well supplied, rates will remain at present levels."
Owners said there was nothing unusual in demand for crude taking a hit during seasonal maintenance and broad fundamentals remain robust.
Total Asian crude refining capacity of at least 1.66 million b/d will be shut for maintenance this month, up from 1.47 million b/d in March, according to data collated by Platts. Shutdowns for May are expected to be even higher at 2.13 million b/d.
Tonnage is a little bit tight for the first decade of April but availability is ample from the second decade onwards, said a chartering source with a South Korean refiner.
"If cargoes don't rush for tonnage at the same time and there isn't a crowding of fixtures, rates will hover around current levels," the same source said.
The number of VLCC fixtures on the Persian Gulf to China route is estimated at 44 in March compared with 49 month earlier, which indicates that China's crude refinery capacity utilization may also fall on the month, market watchers said.
Even Pacific Star's announcement Friday that it is withdrawing seven of its VLCCs from the commercial chartering market owing to differences with Dr. Peters Group, the head owner of the super tankers, failed to revive the market. On an average, there are 2 VLCCs available for every cargo that is yet to be covered with tonnage for loading in the Persian Gulf until April 20 though not all ships will be qualified to move on various routes.
It has been more than a week since rates breached below the key Worldscale mark of 40 but owners are hopeful of a revival due to the delay in discharge of cargoes and slow-steaming of ships.
"Owners have been driven to the wall and can do nothing but resist, there is no scope to reduce rates any further unless someone is willing to undertake a voyage at levels below operational expenses," said a VLCC broker in Singapore.
There are still a few weeks away before the end of the peak refinery maintenance season and the market may continue to wallow in the high w30s and low w40s, the broker said.
"Owners no longer want to fix below the current levels because of the dismal daily returns," the Taiwanese chartering source said.
"The market has bottomed out for the time being," said a source with a VLCC owner. "Better quality tonnage is being offered at higher rates in the market. At the end of the day, we have to draw a line somewhere."
"We are very short [on ships] at the moment and just not offering any ship to charterers. Our message to owners is to stay out of the market and not offer any ship because the current rates are below operating costs," the source added.
--Sameer C. Mohindru; sameer.mohindru@platts.com
--Su Ling Teo; su.ling.teo@platts.com
--Edited by Jonathan Loades-Carter, jonathan.carter@platts.com
The four-week supply of VLCCs for loading in the Persian Gulf is now estimated at 115, up from 61 on February 17, a derivatives broker tracking the VLCC market said. "There should be more [chartering] activity today but with tonnage still well supplied, rates will remain at present levels."
Owners said there was nothing unusual in demand for crude taking a hit during seasonal maintenance and broad fundamentals remain robust.
Total Asian crude refining capacity of at least 1.66 million b/d will be shut for maintenance this month, up from 1.47 million b/d in March, according to data collated by Platts. Shutdowns for May are expected to be even higher at 2.13 million b/d.
Tonnage is a little bit tight for the first decade of April but availability is ample from the second decade onwards, said a chartering source with a South Korean refiner.
"If cargoes don't rush for tonnage at the same time and there isn't a crowding of fixtures, rates will hover around current levels," the same source said.
The number of VLCC fixtures on the Persian Gulf to China route is estimated at 44 in March compared with 49 month earlier, which indicates that China's crude refinery capacity utilization may also fall on the month, market watchers said.
Even Pacific Star's announcement Friday that it is withdrawing seven of its VLCCs from the commercial chartering market owing to differences with Dr. Peters Group, the head owner of the super tankers, failed to revive the market. On an average, there are 2 VLCCs available for every cargo that is yet to be covered with tonnage for loading in the Persian Gulf until April 20 though not all ships will be qualified to move on various routes.
It has been more than a week since rates breached below the key Worldscale mark of 40 but owners are hopeful of a revival due to the delay in discharge of cargoes and slow-steaming of ships.
"Owners have been driven to the wall and can do nothing but resist, there is no scope to reduce rates any further unless someone is willing to undertake a voyage at levels below operational expenses," said a VLCC broker in Singapore.
There are still a few weeks away before the end of the peak refinery maintenance season and the market may continue to wallow in the high w30s and low w40s, the broker said.
"Owners no longer want to fix below the current levels because of the dismal daily returns," the Taiwanese chartering source said.
"The market has bottomed out for the time being," said a source with a VLCC owner. "Better quality tonnage is being offered at higher rates in the market. At the end of the day, we have to draw a line somewhere."
"We are very short [on ships] at the moment and just not offering any ship to charterers. Our message to owners is to stay out of the market and not offer any ship because the current rates are below operating costs," the source added.
--Sameer C. Mohindru; sameer.mohindru@platts.com
--Su Ling Teo; su.ling.teo@platts.com
--Edited by Jonathan Loades-Carter, jonathan.carter@platts.com
No comments:
Post a Comment