Mediterranean VLCC loads Aframax cargo amid low rates

Market: Freight
12/12/24

A very large crude carrier (VLCC) loaded an Aframax-size cargo in the Mediterranean, underscoring weakness in the larger tanker segment as shipowners are willing to accept lower rates.

Poland's Orlen booked the Maran Leo VLCC in late November to load 100,000t of crude in Sidi Kerir, Egypt, from 11-12 December for shipment to Gdansk, Poland, at $1.85mn lump sum. This is less than half the size of a standard VLCC cargo.

VLCCs regularly load Suezmax cargoes, but seeing a very large tanker trading on an Aframax route is rare, according to market participants, and could be symptomatic of dwindling demand.

Shrinking crude demand in China, the world's biggest oil importer, and the continuation of Opec+ production cuts have pushed VLCC rates to yearly lows. The Mideast Gulf to Asia-Pacific rate fell to Worldscale (WS) 40.5 on 11 December, equivalent to $9.52/t and just 5¢/t above a 30-month low.

China's waterborne imports for January-November at 11.5mn b/d were 600,000 b/d lower compared with the same period in 2023, according to Vortexa data. The drop is equivalent to 10 fewer VLCC voyages per month.

But market participants also said the Maran Leo may be seeking to reposition for a Hound Point, UK, to Asia-Pacific shipment, for which rates are much higher at $6.2mn. But such cargoes are rare, with just eight shipments on that route so far this year, according to Kpler data.

With lower VLCC rates, owners may want to avoid booking their vessels for longer period, as if there is a turnaround of rates, they could lose out on revenue.

Shipowner's time charter equivalent (TCE) revenues on the Mideast Gulf to China VLCC route reached as low as $12,707/d on Wednesday, according to Argus data, nearing operating costs of around $10,000/d for VLCC tankers.

By Rhys van Dinther

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