Americas VLCC Rates Hit Record Highs Amid Tight Tonnage

Very Large Crude Carrier (VLCC) rates from the US Gulf Coast (USGC) established record highs on 4 September, according to Hellenic Shipping News Worldwide. This increase was attributed to a tight tonnage list in the Atlantic Basin, coupled with stronger VLCC rates observed across other global markets.

Increased volatility stemming from ongoing risks and uncertainties regarding transits through the Strait of Hormuz has led charterers to secure VLCC cargoes for later dates. Despite this, market participants indicated a limited position list for early- to mid-October loading dates in the USGC.

Rate Developments and Market Dynamics

One shipbroker noted that while charterers typically work further ahead, the current list is sparse. This reduced availability allowed shipowners to capitalise on bullish market fundamentals. A recent transaction on the VLCC USGC-East route saw ST Shipping book the vessel *Helios* for an October 13-16 laycan at a reported USD 29.5 million.

Platts, part of S&P Global Energy, assessed freight for the 270,000 metric tonne USGC-China route at this USD 29.5 million level on 4 September. This surpassed the previous record of USD 29.3 million, set on 4 March. Platts data indicated that the 4 September assessment was 21.6% higher week-on-week.

Some market participants anticipated further rate increases, with one shipowner suggesting on 3 September that rates could reach USD 30 million before the end of that week. Shipowners also received support from rising rates out of the Mediterranean. For example, Pertamina reportedly booked the *C. Progress* for a September 16 loading from Sidi Kerir to Cilacap at USD 29.75 million. Higher Mediterranean rates and firm trading levels from the Persian Gulf contributed to an upward correction in Atlantic Basin and US Gulf prices, according to a second broker.

Increased inquiry levels during the week ending 4 September also provided upward momentum, as multiple charterers competed for ships from the depleted list for similar early- to mid-October laycans. A shipbroker report suggested that "with tonnage remaining relatively tight and the current momentum showing little sign of easing, the market is expected to maintain its firm trajectory into next week."

Transatlantic and Suezmax Impact

While voyages eastward remained preferred for shipowners, the VLCC USGC-UK/Continent route remained largely untested. However, rates for the transatlantic run continued to climb in response to the firmer USGC-East rates. Platts assessed the benchmark 270,000 mt USGC-UKC run at USD 16 million on 4 September, also a record high, representing a 23% increase from USD 13 million on 31 August. Preference for transatlantic voyages continued with more economical midsize tankers.

The significant increase in VLCC rates is expected to exert upward pressure on Suezmax rates. Charterers may shift preference to this smaller ship class due to improved economics. A fourth shipbroker noted that it was currently more cost-effective to charter two Suezmaxes, potentially leading to a splitting of cargoes. A Brazil-based shipbroker added that "When VLCCs are paying almost $30 million for USGC-East, what can we expect from [Suezmax] owners?"

While the Americas has not yet seen an increase in split cargoes, in West Africa, split VLCC-sized cargoes have led to a tightening of Suezmax positions in the Atlantic Basin.