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Week 30: VLCC Rates Plunge below $20,000

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Tanker rates

In the last part of this series, we saw how the Baltic Dirty Tanker Index changed last week. In this article, we’ll take a look at crude oil (DBO) tanker rates. We’ll see which tanker performed best in week 30.

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VLCC rates

According to Weber’s weekly report, the VLCC (very large crude carrier) market has entered into summer stagnation with the rate for the benchmark route (TD3) further declining to $16,482 per day on July 29 from $23,873 per day on July 22. Rates have dropped below $20,000 for the first time since October 2014. Supply-side pressure is mounting, which is having a negative effect on tanker rates.

According to the same report, chartering activity in the Middle East and West Africa was at a six-week low. Total fixtures in the Middle East were down by two week-over-week to total 18. Also, West African fixtures were down by three compared to the previous week to total just two.

DHT Holdings (DHT) and Euronav (EURN) primarily operate VLCCs.

Suezmax rates

According to Weber’s weekly report, the West African Suezmax market saw very slow progression into the August program, due to which we saw rates tumble. The rate on the Suezmax benchmark route (TD20) slipped to $4,746 per day on July 29, 2016. This was a 59% drop from the previous week’s rate of $11,665 per day. Nordic American Tankers (NAT) operates only Suezmax vessels. Teekay Tankers (TNK) and Tsakos Energy Navigation (TNP) have Suezmax vessels in their fleet.

Time charter rates

As spot rates continue to fall, so do time charter rates. The VLCC rate for a one-year time charter fell to $33,000 on July 29 from $35,000 in the previous week. Suezmax rates also fell. The one-year time charter rate was $24,000 per day on July 29, compared to $25,000 per day during the previous week.

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