New York: VLCC timecharter rates on the trip from the Arabian Gulf to the east were estimated at around $195,000 a day, this time last week. This is a dramatic contrast to the same week in 2007, when rates were hovering around just $35,000 a day, according to New York broker Poten & Partners. So far this year, states Poten, there is no sign of the traditional softening of rates associated with summer months in the western hemisphere.
Moreover, Poten believes rates will stay firm in the months ahead. "There are several reasons to expect strong rates to prevail over the months to come," the broker said in its most recent market report. "The supply and demand fundamentals are pointing to a tightening market overall, upping the stakes for further potential rises throughout the balance of the year."
Despite record oil prices, spot market transactions are up by 2% this year but the real surprise of the 2008 market is the lack of growth in the VLCC fleet. The orderbook at the start of the year showed a daunting 43 new VLCCs due to join the fleet, according to Poten statistics. However, conversion and removal activity has meant the overall change in the size of the fleet has been negligible.
"Owners of older or single hull tonnage have looked to capitalise on the strength of other shipping sectors such as dry bulk or offshore, or simply taken advantage of the record scrap steel prices," Poten says. [15/07/08]
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