Charterers may face rough seas

VLCC

Chinese New Year celebrations and the publication of cargo nominations for the second half of March were slightly interrupted by the Institute of Petroleum's London dinner.

This function attracts industry executives from all over the world. Most of them stay in London for the whole week, renewing old ties and forging new alliances.

In the old days, things used to come to a halt in the tanker market for "IP week", but with modern communications this has changed.

A week ago it appeared the cargo availability and the tonnage supply more or less matched up and so it has emerged. Rates for Arabian Gulf/Far East have remained in the Worldscale (Ws) 150 region.

A similar steady feel was provided when Gulf/West voyages remained stuck at around WS120 for the AG/USGulf and WS125 for Europe.

These calm seas may roughen up a bit by the end of this week, though. There was more activity from West Africa last week, and this may upset the equilibrium in the Arabian Gulf.

We have seen in the past that tonnage retained in the Western Hemisphere reduces tonnage availability in the Middle East.

There is also another factor. One senses charterers may be holding back on their chartering activities in the Arabian Gulf in the hope of gaining some commercial advantage when downward pressure on rates makes an appearance.

This is not always a profitable tactic. The tonnage supply and the cargo availability look fairly evenly matched. There is certainty on one side, however, and uncertainty on the other.

The cargoes will almost certainly be there to be loaded. The ships may not be.

Suezmax

The end of the Chinese New Year saw more activity in the Arabian Gulf for both Eastern and Western destinations. Rate levels rose in this area to end the week at WS195 for East and WS135 for Europe, with the probability of more firmness this week.

There was also more activity from West Africa than we have seen in recent weeks. Despite this increase, rates have remained within the Worldscale 150-160 band for voyages to the United States and to Northwest Europe.

Owners' usual enthusiasm for raising the stakes when things get busy was tempered by a distinct lack of activity in the Mediterranean and the Black Sea.

There are high hopes many more cargoes will make an appearance from the Black Sea for loading in March. Therefore, rate levels have fallen back only a small amount and have remained reasonably high at about WS175-185.

Aframax

East of Suez, the market has firmed the further East you look. Indonesia to Japan increased sharply to WS202 from WS125. In contrast, AG/East firmed by only about 10 points to WS155.

In the Caribbean, there was some speculation as to whether rates would continue their firm line, or whether they would drop back. They stayed reasonably steady at about WS 205.

With more cargoes expected to be quoted this week, this may well be the launching point for volatile movements in this unpredictable of loading areas.

The area where owners are being tested is in the Mediterranean and the Black Sea. Rates have continued to drift down, to end the week at about WS110 for a cross-Med voyage.

A notional WS120 is being banded about for the few Black Sea cargoes that have appeared. As with their Suezmax cousins, however, expectations are high that more March cargoes will be quoted next week and that this period of uncertainty can be brought to a close.

Activity in the North Sea was thin, but so was the tonnage list. Rate levels were maintained at about WS160 for an inter-UK Continent movement.

In the high Arctic, ice-class tankers maintained their lofty position and finished the week at WS335. Weather forecasters, however, predict violent winter storms in the far north of Europe.

We may see a premium being paid in a week's time for these most hardy of tanker units.

The writer is a shipbroker and marine consultant with more than 40 years experience in the tanker and dry cargo markets.

Charterers may be holding back on their activities in the Arabian Gulf in the hope of gaining some commercial advantage when downward pressure on rates makes an appearance.

This is not always a profitable tactic. The tonnage supply and the cargo availability look fairly evenly matched.