Industry Note No. 9 - Does this Market Rally Have Legs?

In the midst of a tanker market down-cycle, pressured by over-ordering in prior years, DPP freight rates have surged to the highest levels observed since the winter season of 2016/17. Spot rates on the VLCC TD3C trade began September in the low WS 50s before gradually trading up towards WS 60.5 towards the conclusion of the month. Through the first half of October, the market surged to the WS 80s, peaking as high as WS 88. Many market participants will look to this as sign of a cyclical reversal; however, we view this as a temporary shock to the market influenced by various underlying dynamics.