24-10-2022 Clarksons tips VLCC rates ‘significantly’ higher than $100,000 per day, By Gary Dixon, TradeWinds
VLCC spot rates are set to soar past the $100,000 per day barrier soon, according to Clarksons Securities. Earnings surged last week by as much as 30% to reach more than $80,000 per day, the investment bank said. The Middle East Gulf has become increasingly active, driving up rates. “The availability of ships in the Atlantic has also been limited, forcing charterers to pay more,” analysts Frode Morkedal and Even Kolsgaard said. “While things may appear to be quieter right now, we expect significant rate rises in the next weeks and months.”
In August, Clarksons Securities forecast potential VLCC earnings of $100,000 per day by the winter. “This threshold may be breached in the coming weeks, and rates could potentially increase significantly higher than that, we now argue,” the analysts said. They attributed the strengthening to Europe having to replace more than 1m barrels per day of Russian crude oil imports due to the European Union ban coming into effect on 5 December.
The barrels will be travelling at least twice as far to reach buyers, Morkedal and Kolsgaard argued. And the US continues to sell crude oil from strategic storage facilities, maintaining export levels. UK shipbroker Howe Robinson Partners assessed VLCC rates at $74,500 per day on Friday.
But the London shop is less optimistic about earnings in the short term. “The MEG [Middle East Gulf] got some real traction at the start of the week, with steady fixing, predominately off-market, pushing rates up,” Howe Robinson added. “However, the week ended with a lull, and [we] expect rates will be tested as we go forward.”
The Baltic Exchange assessed average rates from the Middle East to South Korea at $69,400 per day on Friday, 25% up on the week. The exchange also said that five-year secondhand values for VLCCs have surpassed the threshold of $90m. This is the highest level since March 2009, according to Oslo broker Lorentzen & Co.
Since the end of 2021, VLCCs have increased 24.4% in price, according to the Baltic’s index.