Large tankers have been under pressure over the past few weeks and this proved to be the case during the past days as well. In its latest weekly report, shipbroker Charles R. Weber said that "VLCC rates remained under negative pressure this week as demand in both the Middle East and West Africa markets posted w/w declines while the extent of the May Middle East program appeared likely to conclude below earlier expectations as Suezmax demand surged, leading to weaker VLCC fundamentals. There were 17 fixtures reported in the Middle East market, representing a 32% w/w loss, while the West Africa market observed five fixtures, off 29% w/w".
According to CR Weber, "with 116 May Middle East cargoes now covered, there are a likely further 8 cargoes remaining uncovered. Against this, there are 29 units available (including 12 disadvantaged units) from which draws to service West Africa demand should account for six units, implying a surplus of 15 units. This compares with 12 surplus units at the conclusion of May's second decade and a previously‐projected end‐ month surplus of 5‐8 units, and as such is likely to prompt further modest rate erosion through the start of the upcoming week. Thereafter, a rush to start the June program should allow rates to level off and, depending on the extent of early‐June demand could potentially offer fresh upside prospects by driving sentiment".
In the Middle East, CR Weber said that "rates to the Far East concluded the week with a loss of 6 points to ws56 and corresponding TCEs declined 19% to conclude at $24,358/day. Rates to the USG via the Cape shed 6 points to conclude at ws29. Triangulated Westbound trade earnings lost 16% with a closing assessment of $33,435/day". In the Atlantic Basin, "rates in the West Africa market followed those in the Middle East. The WAFR‐FEAST route shed 5.5 points to conclude at ws58 with corresponding TCEs off by 17% to
$25,110/day. The Caribbean market was inactive this week with no fixtures reported. This, together with souring sentiment across alternative VLCC markets saw regional rates remain under negative pressure. The CBS‐SPORE route shed $150k to conclude at $4.10m lump sum".
Meanwhile, in other tanker segments, "the West Africa Suezmax market remained under negative pressure this week, albeit with a moderated pace of rate erosion in‐line with a rebound in regional chartering demand as charterers shored up remaining May stems and progressed into June dates. The week's fixture tally doubled w/w to 14 fixtures. Rates on the WAFR‐UKC route shed 2.5 points to conclude at ws72.5. Light VLCC coverage of the first decade of the June export program relative to the same period during May could help to contribute to sustained Suezmax demand strength as charterers progress further into the June program. A prospective return of the 200,000 b/d Forcados stream would further bolster demand, though this has yet to be confirmed and no corresponding loading program has been released. Meanwhile, tonnage availability remains high, which will likely complicate rate progression even if demand remains elevated", CR Weber said.
Finally, "the Caribbean Aframax market commenced the week with strong sentiment following last week's strong rate environment. However, with available positions having expanded handsomely over the weekend and demand proving light throughout the week, rates corrected sharply. Just eleven fixtures were reported, representing a 35% w/w decline and a three‐month low. Rates on the CBS‐USG route shed 30 points to conclude at ws100. With further units expected to populate an already‐oversupply list of tonnage, we expect that sentiment will remain negative through the start of the upcoming week. The extent of any prospective losses, however, will likely be tied to the pace of inquiry and note that regional TCEs are now below OPEX levels, which should place a floor on further losses", the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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