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Week 5: VLCC Demand Lowest in the Past Few Years

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VLCC rates

According to Weber’s weekly report, VLCC (very large crude carrier) fundamentals in the key Middle East market got worse in week 5 (week ending February 2, 2018). The demand dropped to the lowest level in a few years.

In the Middle East market, 17 VLCC fixtures were observed in week 5. Nine fixtures were covered under the COA agreement, while eight cargoes were actively worked—the lowest level in many years.

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According to Weber’s week 5 report, VLCC rates for the route from the Arabian Gulf to China dropped from $10,925 per day on January 26 to $8,274 per day on February 2—a 24% fall week-over-week. The average rate for all VLCC routes dropped from $13,179 per day to $11,290 per day on February 2. The current rates are 65% lower year-over-year. Euronav (EURN) and DHT Holdings (DHT) mainly operate VLCCs.

Suezmax rates

According to Weber’s weekly report, the Suezmax market remained tight in week 5. Suezmax rates on the route from West Africa to the United Kingdom were $908 per day on February 2. The average Suezmax rates were $2,901 per day on February 2—compared to $2,654 per day the previous week.

Teekay Tankers (TNK) and Tsakos Energy Navigation (TNP) have Suezmax vessels in their fleets. Nordic American Tankers (NAT) only operates Suezmax vessels.

Aframax rates

According to Weber’s weekly report, voyage TCE (time charter equivalent) returns in the Caribbean Aframax market declined to fresh multiyear lows as rates declined more.

Aframax rates on the Caribbean route fell to $2,387 per day on February 2 from $4,000 per day on January 26. The average Aframax rates dropped to $7,063 per day on February 2 from $10,647 per day on January 26.

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