The cost of sending fuel oil cargoes to Singapore from Rotterdam on VLCCs has dropped to the lowest level in more than 10 years due to a large supply of available ships in the UK Continent, sources said.
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The UK Continent-East route, basis 270,000 mt, was assessed $200,000 lower at a $2.3 million lump sum Friday, according to S&P Global Platts data, the lowest since Platts started assessing the route in January 2006.
On the fixture front, VLCCs were booked at $2.25 million and $2.3 million last week for Rotterdam-Singapore fuel oil runs in September. The current freight rates represent a major downward movement from January, when rates were as high as $6.4 million.
The dwindling returns attainable by shipowners on the route this year have been reflected across the VLCC spectrum, with freight rates near historic lows in a variety of regions.
The main factor behind the dropping rates has been an increase in global VLCC supply, with a large number of newbuilds joining the existing fleet.
According to data from Affinity Research, there are 37 new VLCCs due to be delivered this year, with 24 having already joined the fleet. There are a further 39 VLCCs expected to be added in 2017, which is likely to heap further downward pressure on what are already historically low freight rates.
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