Tanker owners are scrapping older tankers in near unprecedented numbers since the start of 2018, but this trend hasn’t yet managed to turn the market around. In its latest weekly report, shipbroker Charles R. Weber noted that “there was little change to report this week on the VLCC front as the over‐supply of tonnage continued to weigh on the market, keeping earnings below daily operating expenses. For the past month TCEs have largely held below $10,000/day, and while this has played a part in the increased incidences of VLCC demolition sales, the over‐ abundance of tonnage shows no sign of relenting”.
According to CR Weber, “this week saw Charterers concentrate on those remaining March stems and initiate the entry into the April program. The expected influx of April cargoes did give Owners some slight confidence to hold out for levels closer to daily operating costs. However, while we did see the start of the April program, the progression was slow; charterers used a continued drip‐feed of cargoes and attracted large audiences keeping rates flat. With the remainder of April stem confirmations due out over the weekend, expectations are for an increase in inquiry. There is a slight undertone of confidence in the Owners camp that the market may finally get some traction, but for now the wheels are still spinning and progress is negligible. A total of 21 Middle East fixtures were reported this week, almost half of those destined for China where rates came off one point to ws36.5 which shows a TCE of about $6,500/day. Preferred voyages to Korea saw rates for modern units trade near ws34, while older, distressed tonnage had to accept a discount to lock in business as evidenced by the latest fixture at ws32 on a 2001‐built unit (which replaced another 2001 built unit that could not vet). Westbound business remains attractive as triangulation shows the highest possible returns and the only routing that is above OPEX today. AG to the USG followed by Caribbean to Singapore (basis ws15.5 and $3.0 mil) shows a TCE of about $11,700/day”, the shipbroker said.
Meanwhile, in the Suezmax tanker market, CR Weber said that “the West Africa market was under negative pressure this week as an earlier rebound of VLCC coverage of regional cargoes left less robust cargo availability for Suezmaxes. With this being particularly evident in this week’s very low fixture tally, the emerging realities rocked sentiment. Just eight fixtures were reported this week, representing a 35% w/w decline and a 10‐week low. Rates on the WAFR‐UKC route shed 12.5 points to conclude at ws57.5. The rate losses led corresponding TCEs to decline by more than half last week’s ending value to just ~$4,464/day. On this basis, further rate downside should be limited as owners may show resistance to trades at stronger losses than those they would observed at present TCEs given average OPEX of ~$9,500/day. The general negative sentiment in alternative markets carried to the Caribbean, despite a largely unchanged regional supply/demand profile. Rates on the CBS‐USG route shed 20 points to conclude at 150 x ws55 while the USG‐SPORE was off by $100k to $2.25m lump sum”, said CR Weber.
“The Caribbean Aframax market commenced the week with an extending of sour sentiment as demand levels were not sufficient to overcome the prevailing oversupply situation. Modest gains did materialize at mid‐week, however, due to an improvement of demand. The CBS‐USG route added 5 points accordingly to conclude at ws95. Further gains will likely be complicated as the supply/demand positioning is largely unchanged from a week ago while availability builds over the weekend is likely”, the shipbroker concluded.
Source: Hellenic Shipping News.