The strong cyclical nature of the VLCC spot market is being repriced.
On February 23, the daily hire rate for the VLCC Middle East–China route (TD3C) rose by USD 18,999 to close at USD 176,000, hitting a periodic high and significantly boosting market sentiment. A number of institutions noted that South Korean shipowner Sinokor Maritime Co., with its continuously expanding VLCC fleet, is exerting stronger marginal influence in the spot market and has become a key variable driving this round of freight rate increases.
Analysts pointed out that the current tightness in available tonnage, combined with heightened tensions in the Middle East, forms the main support for the strengthening freight rates. The Clarksons analysis team led by Frode Morkedal stated that Sinokor has become one of the world’s largest commercial VLCC operators. Signs of its market behavior suggest the company may choose to temporarily hold back part of its tonnage to pursue higher fixture rates. As the proportion of compliant spot VLCC capacity under its control approaches one quarter, its influence over market rhythm and trading sentiment has increased significantly.
Clarksons data shows that VLCC spot daily hire rates closed at USD 162,000 last week, up approximately 25% month-on-month. The one-year time-charter rate has exceeded USD 100,000, reaching an all-time high.
In terms of fixture structure of the 4 VLCC fixtures concluded last Thursday, Sinokor accounted for only 1 vessel. None of its vessels appeared in the 3 fixtures completed on Friday. However, among the 4 spot fixtures on Tuesday, tonnage controlled by Sinokor accounted for 3, showing a degree of concentrated trading in the market.
Isolated high-rate fixtures have further strengthened market sentiment. The Yasa Southern Cross (318,400 DWT), built in 2012 and controlled by ExxonMobil, was fixed by an IOC at USD 85,000 per day for an India voyage, as disclosed by UK-based VLCC pool operator Tankers International.
Meanwhile, Chinese major charterer Unipec fixed the Irini N Lemos (319,200 DWT), built in 2019 and owned by Enesel, at a high rate of USD 163,000 per day for a West Africa–China voyage, indicating continued strong demand from the Far East.
London shipbroker Gibsons noted that fresh enquiries in the Middle East Gulf VLCC market were limited at the start of the week, with overall momentum relatively slow, but regional sentiment remained firm. As Saudi Arabian cargoes and lifting dates were announced mid-week, market expectations rose. Tonnage was gradually absorbed without fanfare, and owners’ rate-holding sentiment continued to strengthen.
Brokers reported that despite the limited number of published fixtures, a considerable number of transactions were concluded privately. Toward the weekend, the available tonnage list tightened further, coupled with frequent news of high-rate fixtures, jointly pushing up freight levels and allowing the market to stabilize at a higher platform ahead of the new week.
As the one-year time-charter rate hit a new high, Clarksons analysts pointed out that 12-month tonnage coverage has been priced at peak market levels, with firm charter rates for both older vessels and newbuildings.
Asset values have risen in tandem. Analysts said VLCC valuations across all age groups have generally been revised up by USD 5 million. If current high time-charter levels are sustained, vessel asset prices still have room for further upside. Clarksons estimates suggest that under the current long-term charter environment, the valuation of a 14-year-old VLCC could rise to USD 100 million, with an upside potential of around USD 10 million from previous levels.
Notably, Sinokor Maritime’s expansion in the second-hand market has resonated with its spot market operations.
According to VesselsValue, on February 16, Greek shipowner Dynacom Tankers sold the Georgios, a 300,000 DWT VLCC built in 2009, to Sinokor Maritime. The transaction price was not disclosed. The vessel has been renamed Malta Prosperity; it was valued at approximately USD 66 million at the time of sale and currently stands at USD 66.7 million.