The Worldscale rate on VLCCs hauling crude from the Persian Gulf to North Asia, which had stayed in the low w30s for some time, hit the w40 mark Thursday for the first time in three months.
After languishing in the w30-w37.75 levels since January 25, rates hit the key w40 level after GS Caltex was widely reported to have taken either the Asian Progress IV for a Persian Gulf to Yeosu, South Korea, voyage, loading May 26, at this level for carrying a 270,000 mt crude cargo.
Neither the ship's owner, Aramo Shipping, or charterer GS Caltex could be reached for confirmation.
The freight rate on the benchmark Persian Gulf-Japan route has moved up by w8.75 in the last nine trading days from w31.25 on April 24, to be assessed at w40 Thursday, Platts data showed, offering shipowners close to $12,000/day in earnings on a double-hulled VLCC, which can move up to 2 million barrels of crude or fuel oil.
The supertanker freight rate has moved in a very narrow range so far this year, with the highest level seen January 8 at w43.55.
"The market is very busy now. Last night more than 10 fixtures were reported. The rates are around w37 or above. Most owners are asking w40 now," a chartering source with a North Asian refiner said.
"The tonnage is well supplied but many shipowners are holding back their ships. I see the Chinese, South Korean and Indian charterers getting very busy".
According to sources, a tightening West Africa VLCC market as well as an increase in the voyages to the East from there, was helping the Persian Gulf market with tonnage out of Asia ballasting into the Atlantic region.
Also, the culmination of the recent holiday period in the Far East saw Chinese and South Korean charterers rushing into the market at the beginning of this week to cover their May second- and third-decade loading cargoes in bunches.
When charterers come into the market simultaneously, it offers owners an opportunity to push up freight levels by holding back their tonnage.
"It goes without saying that there are plenty of indications of a rising market. The tonnage list is getting tighter and tighter," a source with a VLCC shipowner said.
"Several charterers seem to have been caught out. I wonder why they did not see it. Maybe they have become too relaxed due to too many months with too little activity".
Until the beginning of this week, charterers had been able to fix their cargoes pretty much on a prompt basis without having to pay above the last done levels due to the tonnage glut in the Persian Gulf market.
Meanwhile, some sources say the market could see a standoff now that most of the May-loading cargoes have been covered and there could be a feeling among charterers that the market has already reached its peak.
"Let's see if this will last. A lot of cargoes have been covered, so only 14 [spot] cargoes, or maybe a lot less, to go for May. I won't be surprised if this uptick fades away again after a few days," said Marex Spectron's derivative broker Kevin Sy, who closely tracks the VLCC market.
Around 112 May-loading cargoes have been covered so far, according to broker reports.
Source: Platts
