Tanker rates continue to rise with no end in sight

There are few players on the tanker market stage who remember July 1973, when the rate for a voyage Gulf/West was Worldscale 305. Most who were active at that time are out of the spotlight. In many cases, they have retired and a few have sadly crossed the bar.

The prediction last week was that rates for Gulf/West would move higher than Worldscale 200 and those to the East higher than WS300. These forecasts have been surpassed.

So one becomes quite curious as to where the market goes now. It seems that the US economy does well when the country is involved in warlike activities.

While not roaring ahead, it is still chugging along quite nicely and a recent economic dip has been corrected.

Despite the rise of China in the scheme of things, it is the US economy that largely dictates the pace.

In 1973, a products tanker was fixed at WS1285. It is surely not possible for rate levels for larger vessels to move to that height, but there appears to be no barrier in the way.

Of course, there will always be someone in an organisation who has not retired and who has not crossed the bar and who will say enough is enough. The glad shout will be passed down, the brakes will come on and a man in a chartering office somewhere in the world will say the words that no shipowner wants to hear: 'Decline without counter.'

VLCC

As mentioned, last week we said "one can only predict rates in excess of Worldscale 300 for Gulf/East and in excess of WS200 for Gulf/West." To be honest, we were too cautious.

Voyages Gulf/East have been concluded at WS350 and in excess of WS250 for voyages from the Gulf to the West.

There has been heavier demand for VLCC shipments from West Africa, thus keeping vessels in the Atlantic basin and reducing the future tonnage supply in the Gulf.

Then, of course, this heavier demand in West Africa has force rates up in the Western hemisphere as well, where WS300 has been paid for West Africa/US Gulf.

We now have a situation where one can count the number of ships which can get back to the Gulf in 2004.

Recently there have been about 110 fixtures per month from the Gulf region of which about half of the December liftings have already been covered. There only needs to be delays caused by bad weather or port congestion and rates could really skyrocket.

As we have seen, the Suez Canal was blocked for a few days last week causing three or four days delay there.

The feeling is that the market will stay at its level for the first half of next week, until the tonnage supply situation is clarified.

In the second half of the week though, it will surprise very few people if freight rates storm ahead again.

Suezmax

The Gulf has been a busy place for Suezmax fixtures over the last week. It was reported that a vessel was fixed at WS430 for a voyage to South Africa, but this has been denied in some quarters. What is certain is that rate levels of up to WS360 have already been paid.

Similar rates have been paid from West Africa to the US and demand has been strong despite an increase in enquiry for VLCCs from this area.

The Black Sea has seen vessels being concluded at WS370 from Novorossiysk and voyages from the Mediterranean the United States have been fixed at about WS350. The North Sea has seen similar activity and rates in excess of WS330 have been paid.

Aframax

In the Gulf, Aframax demand has not been as strong as in recent weeks, but rates approaching WS 400 have been seen.

In the Mediterranean and the North Sea, similar levels have been maintained, despite there being less enquiry.

In the Caribbeans, things have also been quieter, but here rate levels have weakened and dropped below WS400 for the normal 70,000 ton cargo size.

Andrew Lansdale is a shipbroker and marine consultant with more than 40 years of experience in the tanker and dry cargo markets