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VLCC
WEEKLY REPORT 07/11/08 - 07/17/08
The
week started out at a slow but steady pace, gradually picking
up momentum as each day passed, not unexpected as the Saudi
program was to be confirmed on Wednesday. An already strong
market; Owners were confidently predicting a further rise,
as is often the case at this time of the month and although
Charterers were loath to agree, there was definitely as upward
bias to the market due to the anticipation. Much of the week,
however, was spent with both sides of the equation circling
each other, trying to find common ground and in the end there
proved to be little change in the market. The fact of the
matter is that there is adequate tonnage around, in most cases,
and the market is at such a level that it is difficult to
turn down good business at or close to the right dates when
the next opportunity might entail additional waiting, an expensive
proposition at current levels, and obviously a gamble many
feel not worth taking.
The eastern market was, as usual, the busiest sector and currently
the most attractive with rates for double hulls mostly holding
in the ws230s for longer voyages with a high of ws242.5 paid
for a shorter run to Thailand, equivalent to round trip T/C
returns in the $190,000 per day range with bunker prices in
the mid $700s per ton. The single hulls, which have
been relatively sparse for a while, are currently populating
the position list a little more, and where acceptable, still
demonstrate a considerable saving over the larger more modern
doubles. They started out the week fixing in the ws190-200
range, slowly rising to around ws210 for longer voyages and
in the ws220s for short-hauls to India. This still produces
more than $130,000 per day, very respectable for ships mostly
over 15 years old. The west-bound market, employing exclusively
double hulls, looks rather competitive in comparison, currently
holding in the ws140's. Many Owners can't justify fixing with
such a disparity, however invariably there are some who have
business in the Atlantic for which the such voyages can be
considered more of a backhaul and as long as that continues
to be the case, then the market should hold fairly steady.
Otherwise the AG/West market should theoretically climb towards
the ws160's.
This
week there have been 39 fixtures reported, mostly for August
loading although there were some left over July fixtures concluded
as evidenced below. There have now been a total of 32 fixtures
concluded for August loading which does mean there are plenty
to come with likely another 20 or so by mid month and 40-45
through the first three weeks, where the normal early month
frenzy reaches out to. Tonnage wise there are
32 ships that could be available by mid month, including 20
double hulls and a total of 53 units by the 21st. If Charterers
can continue as they have this week and be patient, and not
all rush in together, there should be a balance in supply
and demand that will keep the market stable despite the fact
that in the current environment, there can always be someone
who gets caught and has to pay up, but that should be an exception
rather than a rule. That said, if past months are anything
to go by, next week will be busy and patience will go
out of the window and the market will climb.
The
Atlantic continues to be relatively quiet for VLCCs,
surprising considering the strength of the alternate suezmax
class that climbed to the higher ws200s. Rates for the
larger units currently remain in the ws180s for trans-Atlantic
cargoes and improved marginally to ws165 for the east and
there are enough ships around, as and when activity picks
up, to keep rates stable for now. It should be noted, however,
that with the strong MEG market as a serious alternative,
some owners are already talking rates some 20 points above
those levels and, although anything is yet to be concluded,
only a little activity will drive rates up rapidly, for which
there is room when one considers the other markets.
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