World News
Morgan Stanley: VLCC Crude Storage Becoming More Attractive
A recent report by Morgan Stanley suggests that with current contango trade in crude, along with low freight rates and bunker prices that have fallen to multi-year lows, very large crude carriers (VLCCs) are once again becoming attractive for use as floating storage even at time charter rates of $35,000-40,000 per day, Platts reports.
The 12 month spread for Brent crude now above $8 per barrel, while bunker prices have been under $300 per metric tonne (mt) in many ports since late July.
However, some charterers are said to be unconvinced, with one charterer of a South Korea-based refiner commenting, "there are not many prospects for floating storage of [crude] as the economics doesn't work."
Indeed, some sources said it was the owners, rather than the charterers, who were pushing for short-term time charter with storage options.
"Owners are trying to do short-term time charter at current rates, thinking that the market will not recover soon," said a Tokyo-based VLCC broker.
"Some Japanese owners are considering giving their ships on short-term time charter because of horribly [low] rates."
In its report, Morgan Stanley also noted that "refinery turnarounds usually peak in October and given the time it takes between chartering and delivery of the cargoes, activity [may] start moving up again in about a month."
Last week it was reported that some product tankers moving diesel and jet fuel are taking advantage of contango to undertake 4,000 mile (6,400 kilometre) diversions around South Africa instead of utilising the Suez Canal.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 551.00 | 3.00 | 672.00 | 5.50 |
| Rotterdam | 515.50 | 2.50 | 652.50 | 3.50 |
| Houston | 540.50 | 4.00 | 670.00 | 5.00 |
| Fujairah | 542.50 | 1.00 | 747.00 | 3.00 |
| Global 20 Ports Average | 573.50 | 1.50 | 756.00 | 2.00 |
| Global 4 Ports Average | 537.50 | 1.00 | 685.50 | 1.00 |
| Global Average Bunker Price | 624.50 | 0.50 | 801.00 | 0.00 |
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