One of the world’s largest crude tankers by tonnage has been reported booked on period charter, according to brokers’ reports.
Euronav’s ULCC TI Europe (pictured; 441,600 dwt, built 2002) has been reported fixed to an unnamed charterer for one year at an unreported daily rate.
Oil markets being what they are, there isn’t much call for super-sized tankers anymore, leading traders to opt to book ULCCs such as TI Europe and its sistership Overseas Laura Lynn (441,600 dwt, built 2003) as floating storage.
Unipec reportedly booked TI Europe in August 2014 for use as floating storage off Singapore. The contract terminated earlier this month.
Reuters claims Unipec had been paying $40,000 a day to charter the ship, and new bids for it have come in at around $36,000 a day.
The 20% decline in oil prices seen in July widened the oil price contango with futures prices, but the floating storage trade remains economically unviable for short-term contracts, according to Evercore research.
“Although the [oil] contango has indeed widened and the cost of storage has declined meaningfully since the last time this topic garnered so much attention (January 2015), the trade, all else equal, is still a money-losing endeavor,” Jonathan Chappell, Evercore’s lead shipping research analyst, said in a note on August 17.
The research estimates monthly floating storage operating costs at $268,000, including bunkers, insurance, and financing, based on a conventional VLCC of around 300,000 dwt.
“Put another way, we estimate that in order for the floating storage trade to become economic again, VLCC charter rates would need to drop to below $16,500/day, a level that has not been reached since September 2014,” Evercore said.
London-based shipbroker Alibra Shipping currently estimates one-year period rates for VLCCs at $32,500 daily.