The seasonal slump in the shipping markets brought about by the Chinese New Year has been shrugged off by the VLCC spot market, which enjoyed a 62% increase in earnings last week, according to Clarkson Research Services.
The driving force was the high availability of crude oil stems out of the US Gulf soaking up the available tonnage. Clarkson Research Services warned that the attraction of ballasting back to the Atlantic may cause a shortage of VLCC tonnage in the Middle East in mid-March.
In the medium term, VesselsValue senior analyst Court Smith noted that the fundamentals may trip up the firmer VLCC spot market.
“The addition of new tonnage to the fleet can have an immediate impact to the spot market, as we have seen at the start of 2019. Other high monthly deliveries have correlated with steep drops in the benchmark TD3 earnings for VLCCs (see image).
Forecasted monthly deliveries are set to remain above average through July 2019, and there are still many units that have been launched in 2019, but not yet placed into service.
New vessels normally offer under the current market level in order to secure their first cargo. Deliveries beyond 2020 are more in line with historic trends, and the removal of older units should accelerate at the start of 2020 as the impact of the new IMO regulations encourages the removal of older units.
Find out more about the latest fleet development and the possible impact on the spot market at the Asian Tanker Conference.