Newbuild VLCCs that have conducted maiden voyages since October have loaded only crude, Vortexa data show, overturning last year’s more unusual trend of carrying middle distillates on many first journeys. Upcoming newbuild VLCCs entering the market in coming months can be expected to stick with crude, in light of the closed arbitrage to export diesel from Asia or the Mideast Gulf to the Atlantic Basin on supertankers.

Only crude from Q4

• Fourteen VLCCs undertook maiden voyages across November-December 2019, all loading crude, and almost all out of the Mideast Gulf.
• October was the last month to see a diesel/gasoil load on newbuild VLCCs – two out of the nine maiden voyages that month did so. 
• Two VLCC maiden voyages are expected in January: the SM White Whale 2 already loaded from Saudi Arabia’s Juaymah port for Asia, and the Okeanis Eco Tankers-owned Nissos Anafi, is on its way to the Mideast Gulf to load end-January, for a South Korea voyage, as per its shipping fixture.
• Braemar expects seventeen 17 VLCCs to be delivered in Q1 2020 – the same number of VLCC maiden voyages observed by Vortexa to load the same time a year earlier. 

Diesel on VLCC trend ebbs 

• The composition of products loaded on the maiden voyages of newbuild VLCCs between Q1 and Q3 2019 painted a very different picture to the one seen in recent months. Out of the 46 VLCCs embarking on maiden voyages between January – September 2019, some 20 tankers loaded middle distillates, and the remainder crude.
• A firmer diesel market in the Atlantic Basin last year supported this activity – distillates loaded onto VLCCs from Asia or the Mideast Gulf and flowed into Europe and west Africa – the latter region typically an importer from Europe. 
• This year, IMO 2020 regulations additionally mean Asia is more likely to retain more diesel/gasoil in the region, especially higher sulphur grades (e.g. 500ppm and 3000ppm), which were exported to west Africa last year.

Product split on VLCC maiden voyages – Vortexa