Worldscale rates for VLCCs on the East of Suez routes have reached more than nine-month highs, Platts cited market participants as saying Thursday, November 27.
The peak has been attributed to strong demand to move crude in the winter season, tight supply as charterers combine smaller cargoes and bullish owner sentiment.
The key Persian Gulf-to-Japan route was assessed w3 points higher day on day Wednesday at w61.
The rate was last assessed any higher on February 19 at w66, Platts data showed.
According to Platts, this is also the first time in over nine months that rates have crossed the key w60 mark, with rates last assessed at the w61 level on February 21.
Higher freight rates and decline in bunker fuel prices have given a significant boost to owners’ earnings.
Daily earnings on the Persian Gulf to East route are now more than USD 52,000, up from around USD 5,800 in end-September, basis 270,000-mt cargoes, according to brokers’ estimates.
Seven ships were placed on subjects overnight, another three were taken privately and at least five to eight cargoes are actively seeking tonnage, Platts quotted a Singapore broker as saying.
Even dry docking ships, that are chartered a few notches below the prevailing market rates, have been fixed at w60-61, brokers said.
“Owners want to capitalize on this higher demand as ships loading in the Persian Gulf in early December will be back only by end-January, and by then the winter season would have peaked and rates will likely subside. Due to this reason, to boost daily earnings, ships are not keen to do shorter voyages such as Persian Gulf to India, and if they do agree they are seeking higher premiums for the routes, owners, brokers and charterers said. Even old ships are commanding attractive rates,” Platts writes.
So far, more than 56 VLCC fixtures for Persian Gulf and Red Sea loading were heard done for December, indicating higher demand compared with the previous month, according to industry estimates.
In comparison, the total number of fixtures for Persian Gulf and Red Sea loading were estimated at 123 for November, 118 for October, 113 for September, 123 for August, 122 in July and 107 in June, brokers told Platts.