Despite some encouraging short-term signals, the underlying demand is not yet strong enough to fully warrant the current positive sentiment in the VLCC market.
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Chart of the Week| AG Supply Vs Demand
Despite some encouraging short-term signals, the underlying demand is not yet strong enough to fully warrant the current positive sentiment in the VLCC market.
AG freight conditions have improved from the early-January extremes, alongside a roughly 20% reduction in net vessel supply from recent peak levels.
Net supply has eased from ~184 vessels (06 Jan 2026) to ~148 vessels (14 Jan 2026), coinciding with a ~110% rebound in TD3 rates over the same period, from ~50 WS to ~105 WS. Despite this improvement, rates remain ~26% below late-November highs (~142 WS on 25 Nov 2025), when AG net supply was materially tighter at ~103 vessels, around 30% lower than current levels.
Forward Balance: Gross Supply vs Demand
A demand benchmark of 8 cargoes per day is applied, reflecting recent observed AG loading averages and providing a neutral near-term reference.
At 10 days forward, gross supply reaches ~110 vessels, versus expected demand of ~71 cargos, implying a ~39-vessel surplus (~55% oversupply relative to demand).
At 20 days forward, gross supply increases to ~215 vessels, while expected demand totals ~142 cargos, widening the imbalance to a ~73-vessel surplus (~50% oversupply).
Even after excluding laden vessels, effective supply remains elevated at ~104 vessels (10 days) and ~193 vessels (20 days), exceeding expected demand at both horizons.
The forward curves show supply accumulating faster than demand, with the surplus widening as the time horizon extends.
Fixture Activity vs Spot Rate Evolution
Fixture activity peaked in late December, with 64 fixtures recorded on 25 Dec, while TD3 averaged ~80 WS. By late January, TD3 strengthened to ~91 WS (26 Jan), while fixture counts declined to 37, indicating reduced fixing intensity. The gap between higher rates and lower fixture volumes suggests that recent rate strength has not yet been fully reflected in fixing activity.
Freight Market
VLCC MEG- China Firmer
Spot rates across MEG–China (TD3C), MEG–Singapore (TD2), and WAF–China (TD15) have recorded strong short-term gains, with WoW increases of +18.5%, +16.2%, and +15.1%, respectively, alongside robust YoY growth. However, the strength fades when viewed on a broader time horizon. All three routes remain materially weaker on a MoM basis, with TD2 and TD3C down ~16% MoM and TD15 down ~7% MoM, while QoQ performance remains well below the magnitude of weekly gains.
Despite recent signs of improvement, elevated ballast availability in AG (114 vessels, +7% WoW) alongside a sharp increase in West Africa (13 vessels, +86% WoW) is likely to reassert supply pressure
The near-term outlook appears moderately bullish, driven in part by a rising trend in VLCC congestion into China, even as demand indicators point to a subdued outlook for January.
VLCC congestion has increased since early December, rising from ~18 vessels to a recent range of ~45–50 vessels, tightening effective supply by absorbing prompt tonnage.
With demand growth limited, elevated congestion levels through late December and into January have helped to a firmer market momentum of rates, partially offsetting the impact of softer loading activity.
Takeaway
VLCC rates have improved, with recent gains primarily reflecting supply-side factors rather than stronger demand.
Near-term indicators remain supportive, though underlying cargo volumes have yet to show a sustained pickup.
In the absence of firmer demand, upside appears limited, and rate movements are likely to remain volatile.
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Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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