The VLCC market has gone “from the doghouse to the outhouse” with rates plummeting across the board in all areas in the week gone by, according to Norwegian broker Fearnleys. Nevertheless, the tanker segment remains in profitable territory, however owners are frustrated that there has been no sustained earnings bump in Q4 with spot VLCCs retreating from $40,000 a day 10 days ago to hover around $25,000 a day now.
“Overall the tanker sector continues to endure a softer than expected 4Q with crude tanker rates bouncing from their 3Q seasonal lows but unable to show meaningful strength,” analysts at Jefferies noted yesterday.
“Whilst markets are frequently volatile, persistently weaker returns in the middle of a traditionally strong fourth quarter are causing concern,” Gibson pointed out in a recent report.
Fundamentals remain “under pressure” according to BRS, which is predicting rates for MEG/China will likely continue softening.
Braemar suggested lacklustre refining margins may have prompted Chinese refiners to cut back purchases of December-loading Mid East Gulf and Atlantic basin crude, preferring cheaper Iranian and Russian barrels that moves mostly on shadow tonnage.
Ship tracking firm Vortexa reported 545 VLCC spot fixtures in the first 24 days of November compared to 840 in the first 24 days of October.
Concluding, BRS warned in a recent report: “This winter could become a winter of discontent for tanker owners across the globe.”
