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WAF-East VLCC rates near 8-month low on Persian Gulf weakness, low Asia demand
The cost of sending a 260,000 mt crude cargo from West Africa to the Far East fell Friday to the lowest level in almost eight months on weak activity in the Persian Gulf, shipping sources said Monday.
VLCC rates on the route fell Worldscale 2 to w37.5 Friday, which equates to $15.16/mt, the lowest since a $15.01/mt assessment on September 23, 2013.
Sources continued to peg rates at w37.5 Monday morning.
"The WAF market feeds off the position list in the East. There are just too many available ships in the Persian Gulf at the moment, charterers are going to be able to pick people off," said a shipbroker.
The broker was not expecting any significant rate movements this week. "Owners are hoping for a busier week, but it looks fairly quiet. There is absolutely nothing happening," said the broker.
This view was echoed by a second broker who predicted a quiet week in WAF.
"If WAF gets busier it would be positive for the owners. But from what we're hearing that won't happen this week. Unipec might have a WAF-China cargo for June 19-20 but there is nothing too firm on that yet. We're bouncing around the bottom of the market at the moment. Owners are depressed. They're not making any money right at these rates," said the broker.
Sources also said slightly weaker demand from Asian refiners for West African crudes was one of the reasons why freight rates on this route were softer as that meant there were less cargoes to fix on this route.
Indian demand for June loading was particularly low compared to April and May, although Chinese demand for June was stable.
State-owned Indian refiners bought only 8.35 million barrels of West African crudes through tenders for loading in June, compared with 13.975 million barrels for May, a fall of 40%, according to Platts data.
India's biggest buyer of West African crude, Indian Oil Corp., issued only one June-loading tender, compared with three May-loading tenders. This was one of the reasons for such a big fall in its WAF imports.
IOC bought 2.95 million barrels of West African oil through tenders for June loading, compared to 10.5 million barrels of West African crudes in May.
Sources said a rising Brent complex against Dubai crude prices over the past few weeks was discouraging Asian buyers from buying many West African crudes for June and July loading.
"The Dubai/Brent EFS is almost as wide as $4.50/b and that is not conducive for WAF grades. We see better value in the Middle Eastern grades," said an Asian refiner.
Source: Platts
VLCC rates on the route fell Worldscale 2 to w37.5 Friday, which equates to $15.16/mt, the lowest since a $15.01/mt assessment on September 23, 2013.
Sources continued to peg rates at w37.5 Monday morning.
"The WAF market feeds off the position list in the East. There are just too many available ships in the Persian Gulf at the moment, charterers are going to be able to pick people off," said a shipbroker.
The broker was not expecting any significant rate movements this week. "Owners are hoping for a busier week, but it looks fairly quiet. There is absolutely nothing happening," said the broker.
This view was echoed by a second broker who predicted a quiet week in WAF.
"If WAF gets busier it would be positive for the owners. But from what we're hearing that won't happen this week. Unipec might have a WAF-China cargo for June 19-20 but there is nothing too firm on that yet. We're bouncing around the bottom of the market at the moment. Owners are depressed. They're not making any money right at these rates," said the broker.
Sources also said slightly weaker demand from Asian refiners for West African crudes was one of the reasons why freight rates on this route were softer as that meant there were less cargoes to fix on this route.
Indian demand for June loading was particularly low compared to April and May, although Chinese demand for June was stable.
State-owned Indian refiners bought only 8.35 million barrels of West African crudes through tenders for loading in June, compared with 13.975 million barrels for May, a fall of 40%, according to Platts data.
India's biggest buyer of West African crude, Indian Oil Corp., issued only one June-loading tender, compared with three May-loading tenders. This was one of the reasons for such a big fall in its WAF imports.
IOC bought 2.95 million barrels of West African oil through tenders for June loading, compared to 10.5 million barrels of West African crudes in May.
Sources said a rising Brent complex against Dubai crude prices over the past few weeks was discouraging Asian buyers from buying many West African crudes for June and July loading.
"The Dubai/Brent EFS is almost as wide as $4.50/b and that is not conducive for WAF grades. We see better value in the Middle Eastern grades," said an Asian refiner.
Source: Platts
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