VLCCs head south
After a short resurgence in TD3C worldscale levels, they are once again on their way back south. The first decade of September saw values on a rollercoaster, dropping to a low of ws24.75 before seeing a good steady climb out of this rut to a much-needed peak at ws38.39 on (14/09) – a level that had not been seen since the end of July. Unfortunately, since then, rates have tumbled with Monday’s spot marked at ws26.71, well on its way to the lows seen earlier in the month.
As rates fell so did the number of fixtures going on subs. The start of the month saw numerous fixtures per day, but since mid-September, these have dropped dramatically. As of Tuesday morning (29/09) we saw an AG/China fixture go on subs at ws28.5, previous to which was on (22/09) seeing ws34 on subs, both chartered by Unipec. The lack of fixtures reflects the uncertainty in the market as to how low rates will fall, seeing all parties holding out amid the uncertainty. As the month draws to an end and the Chinese holiday (Golden Week) is upon us, hopes will be pinned on a brief flurry of activity beforehand.
Looking at the bigger picture, TD3C has seen a rollercoaster of a year with rates hitting nauseating highs and desperate lows, it has certainly been an interesting year for both tanker FFA’s as well as the world. Moving forward for the rest of the year the TD3C curve is looking soft, unsurprising given the uncertainty in the market, with a potential second wave of coronavirus causing oil prices to fall once again. At one time you would have thought a second wave of coronavirus would incentivise the same boost in rates for floating storage as seen in March.
However, with crude still in low demand and floating and land storage tanks still relatively full, the fundamentals are no longer favourable for floating storage plays. It is reported, both Trafigura, and Gunvor have dropped plans for such potential ideas. These plans mentioned a couple of weeks ago, saw traders booking vessels on time charter, believed to be for the purpose of floating storage. Since then they have pulled out of these deals amid worsening market dynamics. With floating storage plays seemingly out of the question, rates near the very bottom again, a lack of cargoes combined with an oversupply of tonnage surely the only way is up from here… (Tradewinds report Trafigura and Gunvor drop plans)
*Iran sneaks past the U.S. watchful eyes*
The start of this month saw Iran testing America’s patience, with respect to the ongoing dispute concerning Venezuela. The first FIS Tanker market report of this month (published 09/0920) saw this dispute explained. Simply, 3 Iranian owned vessels, with their AIS turned off, were on the way to Venezuela carrying CPP. With recent U.S. interventions, the market was unsure if they would involve themselves in this highly delicate scenario, but with it being reported by Tradewinds that the first of these tankers (MV Forest) has arrived at a port in El Palito Venezuela and has started procedures to unload its product – it would appear the U.S. chose to leave these vessels untouched. With the U.S. claiming to shut off all of Venezuela’s exports, could this newly secured deal between Iran and Venezuela pave the way for more shipments and a stronger bond between the two countries who desperately need each other? It is doubtful as to whether the U.S. will intervene the remaining shipments and with a potential change in U.S. political agenda in November, the future is rather questionable as it stands.
An interesting side note, Venezuela has paid for these shipments in Gold, with an estimated 9 tonnes of it, worth around $500m being loaded on to planes sent to Iran since April. The questions of everyone’s mind is why pay in gold and not cash…. (Oilprice report the payment method used)