It is still tumbling rates for the VLCC’s, with the switch to '22 flat rates making the drop even more stark. As Jan is completed and we are already 20 fixtures deep in to Feb in the MEG, charterers are exploring how low they can go in the WS 30’s for East, with each cargo collecting multiple offers. Owners are certainly not helped by bunker prices, with Brent at an eight year high, prices are up close to the USD 700/mt in Singapore, making voyage calculations a harrowing experience. Alas, precious few cargoes working at present for owners to practice calcs on. The Atlantic is no better, with Wafr/East on subs at WS 37.
Some owners are turning to T/C options, where first year returns in a 3-year deal in the low USD 30,000’s per day may seem attractive. But the key for owners will be the Q3 and Q4. They just need to get there!

You'd be forgiven for thinking that oil prices, presently at eight year highs, had parted permanent company with the physical freight market. The silver lining that may clear away the present bleakness comes from Goldman Sachs, who believe that by the next Northern Summer, oil inventories in OECD countries will fall to their lowest levels since 2000, and with it, Brent oil prices rising to USD 100 later this year. To the here and now, the Atlantic remains active with no discernible back haul market, as everything has become fronthaul. If this activity persists TD20 may nudge to high WS 50's. In the East, there's been an uptick in enquiry which may add a point or two, but a fresh round of cargoes is required for it to truly push on. MEG/East trades WS 62.5 for now.

The Aframax market in the Nsea and Baltic has been very slow with rates for cross Nsea hovering around bottom levels. And without an increase in volumes or some support from surrounding markets, it is difficult to see how rates will firm for the next week. In the Baltic we had some excitement on a couple of fuel cargoes, but as one got fixed on a Suezmax (part cargo) it fizzled out. Going forward with February dates in play rates will continue moving sideways for now. In the Med/Bsea from a firm last week we have seen the rates soften and drop a few points this week. This is because cargo activity has come off somewhat, and we have also seen a few Suezmaxes come into play. We expect the market to move sideways with a soft potential in the short term.

Big ships still suffering from the typical January dip after a very brutal start of the year. Crucial milk route Brazil/China in limbo as seasonal weather factors significantly delay iron ore mining and exports, spot volumes remarkably low. Average daily earnings down more than 40 pct w-o-w to come in at around USD 10k. Far East activity, mostly represented by the West Australia/China trade, not sufficient to absorb tonnage as they come open – inter-pacific values consequently shaved off some 30 pct to stand at USD 8k, still better off than the much longer China-Brazil-China round which has lost almost 45 pct and come in at USD 7k. With 2021 average values coming in at USD 33,333 and fundamental outlook for 2022 remains positive, good period tonnage keeps being very much in demand – latest representative fixture appearing 181,000 dwt, built 2011, delivering Far East March for about 12 months done at USD 27k.

The correction in the market showed still negative this week. Wide bid/offer spreads in much of the market led to a great deal of inactivity, as well as talk of Cape tonnage now competing on some of the larger voyage stems. In Asia, the lack of coal exports from Indonesia continued to impact market here, and despite something of a renaissance ex Australia this did little to affect the ever-growing tonnage list especially in the North of the region.

Very fresh supporting the market and rates continued sliding. Both physical and FFA continued the bear run. From Cont to Med usual scrap rounds gone at low USD 20,000. Ultra from USEC to Cont seen fixing at USD 28,000. USG-Med on Ultramax covered at USD 35,000. Some movement in Indonesia reg coal export. Coal run from CIS to China done at USD 10,000. Trip from WCI via Pakistan to Chitta with clinker discussed around USD 23,500. Period rates dropped further where 1-year TC rate now for Supra is USD 20,000 and Ultra USD 22,500. An upturn might just be a couple of weeks away, as we are approaching the Chinese New Year. Since 2010, the market rose immediately after the Chinese New Year every year except 2014.

EAST
A couple of deals concluded in the East this week, and seemingly each lower than the last with the latest India fixture reported below USD 70 Baltic equivalent. Saudi Aramco has released their acceptances and volumes are being reported to be stable - however with a tendency of weaker freight this has yet to trigger much more market activity. A spot FOB tender ex Qatar was also reportedly awarded to a European Trading House.

WEST
With Monday being a U.S. holiday, the week got off to a slow start. The western freight market currently finds itself at a standstill as the product market makes it impossible to entertain freight in the USD mid/high 110s on a Houston/Chiba basis. The balance of owner-controlled tonnage remains more or less unchanged ex USG in February, however, there are relets appearing on the horizon ex USG for February dates and signs of willingness to do lower rates are looming.