Asian VLCC earnings hit $100,000/day, a five-year high

By Finance

Daily earnings for VLCCs on East of Suez voyages hit a major milestone Monday (Oct 5) of $100,000, the first time they have risen that high in five years.

A combination of factors have driven up the rates and earnings on voyages from the Persian Gulf to East Asia, with owners, brokers and charterers citing strong demand from China, lower bunker fuel costs, typhoon-related delays, refining units returning from maintenance, and a larger loading program out of Iraq's Basrah.

Asian VLCC earnings hit $100,000/day, a five-year high

The key PG-Japan rate was assessed 4.5 points higher at Worldscale 88.5 Monday, equalling the highest rate so far this year previously touched July 21, according to Platts data.

Earnings are higher than at that point of the year because bunker fuel costs are currently lower.

Platts assessed 380 CST grade bunker fuel delivered in Singapore at $240.25/mt Monday, down from $305.5/mt on July 21.

"Looks like there is going to be a long happy winter for owners with earnings as high as $96,000-$100,000," a VLCC broker in Singapore said alluding to the upcoming seasonal rise in demand.

China continues to charter more VLCCs to lift crude than expected and their requirements aren't fully met with tonnage taken under the usual contracts of affreightment, he said.

Market participants said that some ships have been delayed due to recent typhoons across the Pacific Rim and aren't in a position to provide their expected time of arrival later this month and next in Fujairah, fueling market sentiment.

Overall, more than 120 cargoes for loading this month in the Persian Gulf and Red Sea have already been covered with tonnage, brokers said.

The number of fixtures for loadings in the region are estimated at 116, 107 and 118 for July, August and September, respectively, down from 134 in June, they said.

Source: platts.com