By Kathryn Stone 2015-05-05 16:10:20
The VLCC market is thriving as major market players announce impressive earnings for the first quarter of 2015. According to a weekly report by Poten & Partners, the VLCC market is “firing on all cylinders” and set to continue this trend into the second half of the year.
So far for 2015 VLCC rates have averaged between a high of around $80,000 to a low slightly under $50,000, which considerably outpaces last year’s averages. Euronav and DHT, whose fleet largely consist of VLCCs, have reported “stellar earnings” for this year amid the strong market.
The resulting boom in the market is the result of a combination factors. In particular, world oil demand growth has been strong. The report indicates that, “this is in part due to unexpected factors, such as a rebound in European product demand as well as increased growth in India and higher demand for transport fuels in the U.S.” Additionally, lower world-wide oil prices have contributed to the increase in demand, and supply continues to grow among both OPEC and non-OPEC members.
In regards to shipping, growth has been relatively limited. Six VLCCS have been delivered this year to date and another 28 are expected to enter service by the end of the year. Consolidation of the VLCC market into fewer owners has increased market prospects. As the report reiterates deals such as the 2013 Euronav’s purchase of Maersk’s VLCC fleet “have leveled the playing field somewhat, as it gives owners more information and creates more discipline in the market.”