Rotterdam-SingaporVLCC freight rates at 5-year high on scarcity, bullish Atlantic market
Time：2015-01-29
Browse：103
Rates on the UK Continent-East route rose $25,000 to a $6.75 million lumpsum Tuesday, the highest since an identical $6.75 million assessment on January 21, 2010.
Shipping sources said there were two major reasons for the thin position list in the UK Continent.
Firstly, the fact that Caribbean-Singapore 270,000 mt freight rates were now being heard at a lofty $7.65 million lumpsum meant that any charterer with a cargo in the UK Continent would have to offer higher rates to prevent shipowners from ballasting their ships over to the Caribbean to take advantage of the hot market there.
“The current Rotterdam-Singapore rates are definitely a reflection of what’s happening in the Caribbean,” said a shipbroker.
Secondly, the current contango in Brent-related crudes meant that shipowners were still being approached by charterers to take their vessels out on long-term timecharter deals with options for floating storage.
“There are not many ships available in the UKC at the moment. Also from an owners’ perspective if they are being offered big money for their ships for floating storage, then they won’t drop their rate ideas in the spot market,” said the shipbroker.
Recent VLCCs to be fixed on a timecharter basis for a period of two years have commanded rates around $42,500 per day.
Fuel oil traders said that increased costs for VLCC hampered the outflows of fuel oil on the Rotterdam-Singapore route despite workable arbitrage economics.
“The arbitrage is still open on paper,” one trader said. The Singapore market has seen sturdy demand supporting a firming backwardation and it seems that the strength will hold for the time being, the source said.
At the same time, the European high sulfur fuel oil market remains relatively weak, with a glut of straight-run fuel oil being blended into the cracked pool amid strong refinery margins.
“People want to move oil East, we see barrels being lifted onto Suezmaxes,” the source added.