Returns from VLCCs taking 2m barrel cargoes of Saudi crude to Japan fell to their lowest level since Sept 2009
Rental income from supertankers shipping Middle East crude oil to Asia, the world’s busiest route for the ships, slumped to the lowest in more than a year as a surplus of vessels continued to undermine earnings.
Returns from very large crude carriers, or VLCCs, taking 2 million barrel cargoes of Saudi Arabian crude to Japan fell 11 percent to $3,937 a day, according to the Baltic Exchange. That was the lowest level since Sept 17, 2009.
Earnings from the benchmark route have been below owners’ daily running costs since Aug 24, according to data from Drewry Shipping Consultants and the Baltic Exchange, both based in London. Crew, insurance and other running costs are $11,601 a day, Drewry estimates. Income has been below that for 31 sessions.
A rally in charter rates “is unlikely to be sizeable given the pressure of supply,” London based analyst Maritime Strategies International said. While returns on the Middle East to Japan route may rise to $20,600 a day by December from an average of $8,800 a day last month, they will drop back to $16,800 by March as more of the ships become available, the freight forecaster said.
Maintenance has cut Asian refinery output by about 1.8 million barrels a day in September and October, lowering demand for crude oil shipments, it added.
Global crude oil tanker numbers will expand 4.4 percent this year and another 6.8 percent in 2011, DnB NOR Markets said in a Sept 14 report. The VLCC fleet will expand by 30 to 40 vessels a year over the next two years, Steve Christy, head of research at EA Gibson Shipbrokers, told the TradeWinds newspaper Sept 29.
The glut of supertankers competing for Middle East crude cargoes stayed unchanged from a week ago, according to the median estimate of six shipbrokers surveyed by Bloomberg News yesterday, with 28 percent more VLCCs for hire over the next 30 days than there are cargoes.
Charter rates as measured in industry standard Worldscale terms retreated 1.2 percent to 44.92 points today, the lowest level since Nov 11. Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes.
The Baltic Dirty Tanker Index, a wider measure of crude oil transportation costs, climbed 3.6 percent to 714 points.
The gauge was lifted by a 33 percent jump in charter rates for aframax class tankers to ship 80,000 metric ton cargoes of crude oil across the Mediterranean Sea.
A strike at the Fos and Lavera oil terminals at the French port of Marseille entered its 10th day, delaying tankers that would otherwise be loading or discharging cargoes.