VLCC, Suezmax, and Aframax Segments Navigate Pre-Chinese New Year Dynamics

After a couple of weeks of a gently sliding market, we see a bit of a pre-Chinese New Year rush. Charterers have booked multiple ships, taken off the market with no details attached. As such, no real tangible uptick in rates as deals done in the shadows are rarely above the last done, or anything of any real excitement. Charterers coming to the fixing table later this week or early next will find fewer options, but plenty of tonnage remains to soak up any immediate demand. The MEG/East market sits in the mid-high WS 50 depending on the tonnage age/quality. As for the Atlantic market, again, plenty of available vessels. Rates for West Africa/East sit a little under WS 60 and USG/Ningbo around USD 9m.

VLCCs are the size likely least affected by the current situation in the Red Sea, however, any improvements in the Suezmax and Aframax markets, as a result, will likely trickle up, coupled with the increase in ton-miles taken by the VLCC fleet are all upward signs for the market in the coming weeks.

Suezmax market feels poised in both the East and West hemispheres. The Middle East Gulf has been extremely active off-market as charterers look to work quietly to prevent stoking the fire (rate-wise). Geopolitical aspects have positively impacted rates for backhaul cargoes with Basrah/UKCM trading around the WS 100 mark (via Cape of Good Hope) with no evident downside. Considering how frequent Red Sea attacks have been and how many ships are being rerouted via the Cape, rates have a firm foundation for the near/medium term.

In the Atlantic, there has been steady activity with rates in West Africa last pricing at WS 110 (TD 20) but with the potential to slide to WS 105-107.5 before rates possibly bounce again to recapture WS 110 levels very quickly (due to active USG market balancing out inquiry in the Atlantic).

The market has a softer feel as we head into February, the 1st decade seems to be mainly related to being programmed with limited activity. Surrounding areas still look attractive to owners with a resulting steady movement of tonnage out of the area. Natural dates moving into the 2nd decade. A somewhat erratic feel to rates in the Mediterranean this week with Aframax owners keeping up the pressure and enjoying strong returns on local runs. The tonnage keeps finding its way back into position with owners in the region slightly lacking in diversity and so could continue to have a chance at holding their ground, though Suezmaxes remain a potential threat waiting in the wings. There is no sign of further upward potential on CPC runs as owners await 3rd decade stems.

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Source: Fearnleys