US trader Koch Logistics this week fixed a VLCC tanker at the highest reported rate for a one-year timecharter seen in years, but other fixtures point towards the start of a bearish trend in the VLCC period market as spot rates plateau.
Koch Logistics fixed Cosco Dalian’s VLCC Cosgreat Lake (298,800 dwt, built 2002) on a one-year timecharter for $50,000 daily, which could well be the market’s peak, brokers say.
The trader also fixed Tsakos Energy Navigation’s VLCC Millennium (301,200 dwt, built 1998) for one year and three months at $41,500 daily.
Two of Maran Tankers’ 20-year-old VLCCs were fixed on timecharter to commodity trader Vitol this week at slightly more conservative rates.
Maran Lyra (286,000 dwt, built 1995) was fixed for one year and three months, also at a rate of $40,000 daily, according to brokers’ reports.
Maran Centaurus (300,300 dwt, built 1995) was fixed on a one-year timecharter for $40,000 per day. The vessel this month concludes an eight-month timecharter to Vitol, fixed at $33,000 daily for use as floating storage. AIS data, however, shows the vessel has been engaged in conventional trading between the Middle East Gulf and the Far East during the period.
Although the spot market for VLCCs has been booming over the past month, TCE spot rates seem to have plateaued this week. On Monday, the TCE rate peaked at $85,643 per day – the highest rate seen since August 2008, just before the slump. The TCE rate decreased over the rest of this week and was assessed on Thursday at $83,505 daily.
The period market looks set to follow suit and take a breather. Today, London-based shipbroker and timecharter specialist Alibra Shipping estimates rates of $49,000 daily for a one-year VLCC charter, which is a decrease on its estimate of $51,500 daily, posted a week ago.
The bearish trend coincides with the increasing price of crude oil. Brent crude has jumped around 9.1% ($4.40) over the past week, from $48.13/bbl on October 2 to around $52.53/bbl at the time of writing today. Brent has been trading at around the $48/bbl mark over the past month, with little volatility.
Similarly, the price of WTI has made a 9.6% ($4.36) gain over the past week, from $45.54/bbl on October 1 to $49.90/bbl currently.
Chinese buyers, in particular, having been stockpiling crude while the price was low, spurring the VLCC spot market, but great leaps made in crude pricing will kill the incentive to import for building inventories.
Although the world is facing an oversupply of crude oil, forecasting group PIRA Energy predicts crude prices will move up to $70/bbl by the end of next year and reach $75/bbl in 2017, according to Reuters reports.