World News
Drewry: VLCC Rate Rise in May Could Be Short-Lived
The freight rates for very large crude carriers (VLCCs) got a boost in May from increased activity in the Arabian Gulf, even as tanker markets remained generally weak, according to Drewry's Tanker Insight.
The Drewry Tanker Earnings Index declined 31 percent during the month to 31.2, but Arabian Gulf activity brought spot chartering in the dirty tanker market and VLCC rates up.
About 87 million tonnes of crude oil was fixed for shipments in May, up from 76 million tonnes last month.
For VLCC shipments, the number rose to 40 million tonnes from 30 million tonnes in April.
"The spot rates in the tanker sector, especially for large vessel categories, have been very unattractive and owners are finding it difficult to recover the operating cost of their vessels," Drewry said.
"In such a scenario, a modest recovery in freight rates in May gave some solace to the owners."
Spot rates from the Arabian Gulf to Japan rose 15 percent to World Scale (WS) 38, allowing vessels to realise positive earnings, while West Africa to China rates rose 3 points to WS37.
However Drewry warned that seasonal drops in demand and continuing high tonnage supply may push rates back down.
Shipping billionaire John Fredriksen recently predicted that the crude oil tanker market will take at least two years to recover.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 504.50 | 2.50 | 620.00 | 3.00 |
| Rotterdam | 456.00 | 1.50 | 621.50 | 2.00 |
| Houston | 476.00 | 7.00 | 624.00 | 1.00 |
| Fujairah | 496.50 | 2.00 | 713.00 | 2.50 |
| Global 20 Ports Average | 526.50 | 0.50 | 712.00 | 0.50 |
| Global 4 Ports Average | 483.00 | 2.00 | 644.50 | 0.50 |
| Global Average Bunker Price | 570.50 | 1.50 | 751.00 | 1.00 |
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