VLCC Fixture from the Middle East on the Decline

Activity in the VLCC Middle East market plunged further over the course of the past week. In its latest weekly report, shipbroker Charles R. Weber said that “rates in the VLCC market were largely range bound this week with an expected upward push prevented by the appearance of hidden positions, which altered the supply/demand balance for the Middle East market’s November program.  A pause by charterers between the Middle East market’s November and December programs also tempered the positive undertones that had prevailed at last week’s close and led to modest losses at the start of the week, which were ultimately pared as the week progressed”.

According to CR Weber, “there were 16 Middle East fixtures this week, marking a 24% w/w decline. Meanwhile, there were six fixtures in the West Africa market, a gain of one on last week’s tally. Draws on Middle East positions were augmented by one fixture for loading in South Africa and two speculative ballasts to the Atlantic basin. With the November Middle East program now complete, we note that the month’s availability surplus was unchanged from October’s 14 units. Looking forward to the first decade of the December program, the surplus is likely to narrow to eight units, which should substantiate a positive progression from the narrow range of rates observed over the past month. Furthering the likelihood of gains during the upcoming week, we note that the number of commercially disadvantaged units populating tonnage lists has declined markedly, implying that requirements will be more heavily vying for competitive units”.

The shipbroker added that “historically, the supply surplus narrows progressively during the December program and the declining replenishment of units on position lists from an earlier surge in Atlantic basin demand is likely to contribute to this year’s trend, which will likely see rates extend gains through the conclusion of the December program. Middle East AG‐FEAST rates concluded off by two points to ws68. Corresponding TCEs were off 6% to ~$29,045/day. Rates to the USG via the Cape lost two points to conclude at ws26.5. Triangulated AG‐USG/CBS‐SPORE/AG TCEs declined by 3% w/w to ~$30,623/day. Atlantic Basin Rates on the WAFR‐FEAST route shed two points to conclude at ws70. The corresponding TCE was down 2% to ~$30,311/day. Rates in the Atlantic basin remained soft on a decline in regional demand, including, notably, no fresh US crude export fixtures from the USG for the first time in nearly two months. Rates on the CBS‐SPORE benchmark route shed $50k to conclude at $4.50m lump sum. Round‐trip TCEs on the route were largely unchanged, concluding at ~$30,367/day”, CR Weber concluded.

Meanwhile, in the Suezmax market, “rates in the West Africa market were soft through most of the week, though there was a modest paring of losses on Friday. Demand levels were unchanged from last week with 11 fresh fixtures. Demand in the Middle East market rallied to a YTD high following two weeks of very slow demand and Caribbean market busied as well, with both having the effect of reducing the specter of ballasters into the West Africa market. Rates in the WAFR‐UKC route shed 5 points for the week to conclude at ws77.5, having touched a low of ws75 at mid‐week. Rates could extend their gains during the upcoming week as demand is poised to strengthen. Low VLCC coverage of the first two decades of December program implies greater Suezmax cargo availability as charterers progress into month”, CR Weber said.

Finally, in the Aframax market, the shipbroker said that “rates in the Caribbean Aframax market commenced the week with an extending of the soft trend of recent weeks. However, as demand levels improved considerably and progressively reduced availability levels, rates reversed direction towards the end of the week. The CBS‐USG route added 2.5 points on the week to conclude at ws112.5 – having dipped earlier to the ws100 level. With owners expected to remain bullish at the start of the upcoming week, further rate gains should materialize, particularly if demand remains elevated ahead of the Thanksgiving weekend”, CR Weber concluded.