Rates for Asia-bound very large crude carrier (VLCC) shipments out of the Americas have risen to their highest levels in eleven weeks on the back of heightened inquiry as demand from Chinese refiners continues to rally after the lifting of some of the country's city-wide lockdowns.
Since 30 June, the US Gulf coast-China VLCC rate has risen by 13pc to $7.15mn lump sum, including load port fees of $250,000, equivalent to $3.40/bl for WTI cargoes. The rate previously hit a two-month low of $5.15mn lump sum, equivalent to $2.56/bl, on 12 May, before beginning to rebound at the start of June. This coincided with the lifting of a city-wide lockdown in Shanghai on 1 June after China struggled to contain the spread of regional Covid-19 outbreaks.
According to Argus data, the lifting of such lockdowns increased the apparent oil demand in China — measured by the sum of domestic crude production and oil imports — to its highest level since January at 15.9mn b/d.
Charterers have shown increased inquiry for China-bound crude shipments out of the US Gulf coast, tightening available tonnage and putting upward pressure VLCC rates out of the Americas. So far in July, shipowners have fixed four VLCCs for US Gulf coast-China voyages, compared with four fixtures on the route through the entire month of June.
China was the largest global importer of seaborne crude from 2019 to 2021 but was overtaken by the EU in the first half of 2022. However, the nation has indicated significant interest in economic recovery. China's Ministry of Commerce awarded a second batch of crude import quotas to refiners and traders for 2022 at 1.05mn b/d, a 49pc increase from the same batch in 2021, at the end of June.
Source: Argus
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