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News<br />

INTERNATIONAL<br />

West-<strong>to</strong>-East VLCC<br />

trade picks up<br />

West-<strong>to</strong>-East VLCC (very large<br />

crude carrier) trade is gaining<br />

momentum contributing <strong>to</strong><br />

almost 16.8 per cent of overall VLCC<br />

demand in 2009, compared <strong>to</strong> 13 per cent<br />

the previous year. VLCCs saw 39 per cent<br />

increase in demand in West Africa and<br />

India trading and 35 per cent gain in<br />

Americas and Asia trades, offsetting the<br />

losses on other major trades, US-based<br />

analyst McQuilling reported.<br />

The popularity of the West-<strong>to</strong>-East<br />

trades that gained momentum through<br />

2009 has provided signifi cant <strong>to</strong>nne-mile<br />

demand for an otherwise over-supplied<br />

VLCC market, said the report published last<br />

week. According <strong>to</strong> analysts, the crude oil<br />

trades in particular from West Africa and the<br />

Americas <strong>to</strong> India and the Far East, have<br />

seen year-on-year growth that <strong>to</strong>ok off in<br />

the fourth quarter and prompted a rally in<br />

the spot freight rates that has yet <strong>to</strong> fi zzle<br />

out. “As these trades continue <strong>to</strong> consume a<br />

greater portion of the fl eet, losses on other<br />

major trades are largely being offset by this<br />

long-haul’s emergence.”<br />

“With updated data refl ecting actual<br />

<strong>to</strong>nne-mile demand through 2009, we were<br />

able <strong>to</strong> validate our commentary regarding<br />

changing VLCC trading patterns,” it added.<br />

The traditional “front-haul” TD1, moving<br />

crude between Arab Gulf and US Gulf, lost<br />

more than 28 per cent of its demand since<br />

2008, slipping from a 16.4 per cent share<br />

of <strong>to</strong>tal VLCC business <strong>to</strong> 12.2 per cent in<br />

2009. Besides, the TD4 trade from West<br />

Africa and the US lost 28 per cent of its<br />

demand, emphasizing the detrimental<br />

impact of the US recession on domestic<br />

liquid fuels imports.<br />

In contrast <strong>to</strong> these losses, VLCCs, the<br />

report said, saw an increase in West Africa<br />

and India trades, Americas and Asia trades,<br />

and West Africa and Asia trading (12 per<br />

cent). These traditional “back-haul” West-<strong>to</strong>-<br />

East trades combined <strong>to</strong> take a 16.8 per cent<br />

share of VLCC demand in 2009, up from a<br />

13.3 per cent share in 2008.<br />

“These results lead us <strong>to</strong> question the<br />

industry’s definition of the ‘front-haul/backhaul’,<br />

highlighting that TD1 now commands<br />

a lesser share of VLCC demand than the<br />

West- <strong>to</strong>-East trades at 12.2 per cent<br />

versus 16.8 per cent. To be fair, most of<br />

North America was mired in recession last<br />

year while economies in the East continued<br />

<strong>to</strong> grow,” it said.<br />

Although the hard demand data for<br />

2010 is not yet available, the analysts said<br />

they can attest <strong>to</strong> the West-<strong>to</strong>-East trade’s<br />

growing resilience given current spot fi xture<br />

records. “We track VLCC fi xtures on these<br />

routes up 92 per cent year-<strong>to</strong>-date from the<br />

same period last year. This points <strong>to</strong> the<br />

growing demand for liquid fuels in China and<br />

India, along with expansions <strong>to</strong> Reliance’s<br />

refi neries whose Jamnagar complex now<br />

boasts the world’s largest capacity at 1.24<br />

million barrels per day,” it added.<br />

May 2010 Link 53

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