At least two VLCCs have been fixed to carry high sulfur fuel oil at the end of September from Rotterdam to Singapore, while another vessel is on subjects to carry HSFO for mid-September dates, as arbitrage opportunities from Europe to Asia show signs of improvement, trading and shipping sources said Wednesday.
There were reports that Litasco had fixed the VLCC Astro Challenge to load HSFO on September 29 in Rotterdam for delivery into Singapore at a lump sum rate of $3 million.
Litasco was unavailable for comment.
In addition, sources said Unipec fixed the vessel Dorra to load HSFO September 27-29 in Rotterdam for delivery into China or Singapore at a lump sum rate of $2.95 million.
Unipec was unavailable for comment.
One source said Unipec had already fixed all the volume needed for its voyage and would thus have little market impact.
Meanwhile, sources also said that Petroineos had placed the VLCC Overseas Everest on subs to load HSFO September 14-16 in Rotterdam for delivery into Singapore. A source at Petroineos, however, declined to comment.
Traders said it now looked more appealing to send high sulfur parcels to Singapore.
"I think it [the arb] works. Arb economics allow to land a cargo at MOPS plus $3/mt. I think you'll find a buyer at that price in Singapore," a trader said.
MOPS is an acronym for Mean of Platts Singapore. It is the outright physical assessment for a given product - in this case the FOB Singapore 380 CST HSFO assessment.
"[The arbitrage] looks a bit better versus yesterday early morning," a second trader said, adding that it was still somewhat debatable since companies tend to calculate the arbitrage opportunity in different ways.
Some traders, however, were less enthused about the arb economics and termed it "as marginal at best."
Freight rates for VLCCs traveling on the Northwest Europe to East route remained steady this week despite these fixtures, but sources said if activity continued to increase, rates could rise.
Freight rates for VLCCs on this route have been pegged at $3 million since last week, and sources said rates were likely to hover around the $3 million mark for now.
Source: Platts