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US-China VLCC rate at 3-month high

  • Spanish Market: Crude oil, Freight
  • 07/03/23

Resurgent Chinese crude demand propelled the US Gulf coast-China rate for very large crude carriers (VLCC) to its highest level since early December after a three-month slump.

The rate on Monday reached $10.7mn lump sum, equivalent to $5.08/bl for WTI, including $250,000 load-port fees, the latest gain in a rally that began on 1 February when the rate was $3.51/bl, a five-month low. Since then, Chinese seaborne crude imports have climbed by 600,000 b/d to about 9.7mn b/d, according to Vortexa.

Global VLCC rates have been trending upward since late January and early February, driven in part by the economic reopening in China, the world's largest crude importer. The long-haul nature of routes from the Americas to China stretches the global fleet, with voyages from the US Gulf coast and Brazil taking about 51 days and 37 days, respectively, compared with about 20 days for shipments from the Mideast Gulf.

Combined, the US and Brazil sourced about 11pc of China's seaborne crude imports in February. The VLCC rate from Brazil has soared to $4.30/bl on 6 March from $2.94/bl on 1 February. While a new 9.2pc tax on Brazilian crude exports could lower the country's exports to Asia, it is not expected to affect freight rates.


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