Singapore (Platts)--25Mar2011/707 am EDT/1107 GMT

The number of crude cargoes loaded monthly on spot VLCCs out of the Persian Gulf hit a year high of 120 fixtures for in March, but freight rates for April loading have so far failed to find any support due to this month's increased activity, shipping sources said Friday.

"The VLCC market is recent days have seen a protracted struggle between the owners and the charterers for keeping the rates at levels which can justify the high bunker prices..." said broking house JM Baxi's VLCC broker Harkesh Kumar.

"While at the same time there is some relief rate-wise for the owners who have been facing a very tough market in the past few months. The charterers' response has been one of understanding if not exactly supportive."

According to VLCC sources, the demand from Chinese and Indian charterers were the key to March loading dates seeing 120 cargoes being fixed. While 107 cargoes were covered on spot VLCCs for the January loading window, February was a notch up at 114 stems.

"There is no impact from the March loading numbers [on the April market]," a Japanese chartering source said, adding that there were too many vessels in the market even if the owners were trying hard to keep the freight levels from dropping.

The benchmark VLCC rate on the Persian Gulf-Japan route has fallen by eight Worldscale points in the last 10 trading days from w69 on March 11 to w61 Thursday.

"Next week the charterers will be aiming for w55. But still the market could be maintaining the w60 level. I don't see any factors helping the market," the chartering source said.

A source with a VLCC owner said the activity level for the April first decade loading window was less because the "gap" between the charterers' and owners' rate assumptions.

"The charterers are asking for levels at fifties, the owners are offering at mid w60s and may agree for w62.5," the source said.

JM Baxi's Kumar added that the continuing instability in the Middle East countries was making sure that all buyers of its crude are scrambling to keep their inventory levels at safe levels.

Meanwhile, he added that the newbuilding VLCCs coming into the market this year were being helped by "the volumes of oil being consumed" by the demand from China and India.

"It comes as little surprise that many of them are deploying their steel assets [VLCCs] in the East of Suez [market] now," Kumar said.

--Pradeep Rajan, pradeep_rajan@platts.com

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