Freight rates for very large crude carriers (VLCCs) are likely to remain flat next week, a situation that could well last until August, brokers said on Friday. "Rates are stuck. I don't see there being any hope for July cargoes. Similar rate levels are probably here for August cargoes," a Singapore-based supertanker broker said on Friday. Current pricing of VLCC derivative futures for the Middle East-Japan route stood at 52.50 on the Worldscale measure for July.
That falls to W49.75 for August, W49.50 for September and W54.50 in October. "That indicates much of the same rates story we've got now," the broker said. "There's been bits and bobs of chartering activity this week. But it's been really dull," the broker added.
Rates have remained virtually unchanged since last week. "The Asian VLCC market remained depressed on the back of stale activity," said Rachel Yew, commodity and freight analyst at online trading platform Oceanfreightexchange, in a report on Friday. Rates for VLCC cargoes from West Africa to China are also unlikely to move from current levels. "The VLCC market in West Africa was equally uninspiring. The ongoing rebound in Chinese demand for Angolan crude may lend some support to August cargo volumes," Yew said.
Old vessels and those straight out of dry dock needing immediate employment have put pressure on rates while owners of newer ships have resisted charterers' attempts to seek lower rates. "Handicapped ships are pushing the market down and modern tonnage is pushing it up, so one is counterbalancing the other, so rates aren't going anywhere," the Singapore broker added. With rates around W50-55, equivalent to $16,500-$21,000, owners are covering operating costs and could be making money.