The Mediterranean Sea is becoming an emissions control area (ECA) starting May 1, 2025. This means that ships sailing in the Mediterranean will need to use fuel with a maximum sulfur content of 0.1% or install scrubbers to reduce emissions. Refineries and bunker suppliers have shown they can adapt to changes in demand, but there will be implications for bunker prices and commodity flows in the region, reports Gibsons.
Crude Oil
East
A slow week in the AG region for VLCCs as the remaining October cargoes were covered. Due to the lack of activity/healthy supply of tonnage Charterers were able to find an opportunity to put pressure on freight levels which led to an easing after they had sat steady for much of the week. Looking forward into next week Owners will be hoping to see a flurry of activity for 1st decade November. Charterers should however be able to pick tonnage off as there is a decent overhang. Today we are calling AG/China in the region of WS55 and 280 Ag to USG fetches WS37 via Cape.
In Suezmax markets in the East Charterers will be looking to break 140 x WS70 via C/C next week but don’t be surprised if more gets done for fixtures with options. Rates to head East have softened slightly to around 130 x WS115 and next week it seems likely that we will see some VLCCS start to come into play taking part-cargoes.
Despite the AG Aframax market remaining relatively inactive, sentiment has firmed due to rising tensions in the region. Rates are pushing upwards with AG/East now assessed at 80 x WS150, however, we are yet to see a straight run achieved at this level. After a clear out at the front end of the list, Owners finish the week with a more positive outlook than when it started.
West Africa
Freight rates in this sector have remained on a steady course this week, although there has been a lack of on the surface enquiry. Questions/fixing being done off market still provides the region with some strength but with levels in the surrounding regions easing, the chances are WAF will follow suit if the activity is not there to support current levels. We expect this more positive outlook to continue into next week and today we expect 260 WAF/China to fix in the region of WS61 level.
Suezmax markets in West Africa are firm, with an uptick in the USG off the back of some delays. For TD20 today, we estimate rates to be around WS95. Though on the early side, tonnage remains tight and the option of cargoes from the Americas remains, which will likely pull a few ships across the Atlantic.
Mediterranean
TD6 remains relatively untested but with rates in West Africa still making sense from East Med open positions, we feel rates are around 135 x WS97.5. Libya/East remains relatively flat at around $4.6M, with a few putting their hands up for this run.
The Mediterranean Aframax market has gone from strength to strength this week off the back of increased Libyan activity, a warm States market and replacement cargos. The recent political solution in Libya saw some early cargoes worked and this allowed Owners to push for higher for other runs. Ceyhan voyages crept up to WS155 levels with small discounts available in particular cases but Libyan fixtures rose to WS190 and WS200 levels in tricky cases. CPC was fixed at WS160 but in theory the next done should be much higher. In the main now Suezmaxes are in play despite also firming and they will limit further growth. But for cargoes still needing Aframax-only tonnage, the going remains firm.
US Gulf/Latin America
VLCC rates from USG have weakened on the back of a lull in activity as well as some failings for TD22 runs. Tonnage remains on the tighter side and with potential weather delays for ships opening up in the UKCM region, the feeling is that the Atlantic basin remains the most exposed position to see further upward gains. The Brazil export market has seen little action so far, with fixtures being reported in dribs and drabs. Today we expect a USG/China cargo to pay in the region of $8.4m and a Brazil/China run is around the WS60 level.
Aframaxes for TD25 corrected themselves after the fast run-up from the prior week, losing about half of their gains. The list remains healthy with some ballasters, despite the firming in the Med. Would expect a sideways push to start off next week until we can judge enquiry.
North Sea
Despite turbulence in surrounding regions the North Sea Aframax market plugs along in its standard steady fashion with WS122.5 being repeated as the benchmark. We can expect a little more action with the refineries coming back online but in reality, any growth will be slow and steady.
Clean Products
East
Steady activity for the LR2s in the East and the tonnage list has started to clear out. However, there remains tonnage for both East and West stems and as such, rates hold flat for now. TC1 is at 75 x WS115-117.5 and Jet West at $4.1-4.2m levels. The LR1s have been quietly busy and as a result, the list has seen a good proportion of prompt tonnage removed. This is still a work in progress and accordingly, rates have been negatively tested, though with another week of consistent activity, Owners could start to see an upside. For now, TC5 is at 55 x WS120-125 and West at $3.5m levels.
Firming of the MRs in the AG continued this week with sustained activity and flow of cargoes seeing some WS50 points added to TC17. This run, as well as localized xAG runs, have been the main driver for the clear down in tonnage, with only a handful of older/less well-approved units now left in the next 7–8 day window. As Charterers start to reach forward on dates to secure ballasters, the expectation is for this firming trend to continue into next week. TC12 is due a test, with the expectation of WS150-160 next and westbound numbers to follow suit.
Mediterranean
All in all, it’s been a busy week for the Handies here in the Mediterranean, which has helped clear out the armada of tonnage we saw on our lists last week and as a result has seen rates firm. 30 x WS95 was the call for xMed on Monday morning, but thanks to a big influx of cargoes early on the list tightened and we soon saw rates push to 30 x WS112.5 by midweek. Fast-forward to the present and we see last done vanilla xMed at 30 x WS125, with 30 x WS145 also achieved for a cabotage run. Heading into the weekend and the list remaining tight for well-approved tonnage, expect positivity to continue from Owners come Monday.
Finally, to the Med MRs, where it has been a positive week with good inquiry levels and rates able to kick on. We began the week with Med/TA trading at 37 x WS85 but thanks to some improved enquiry including a few Nap stems rates, rates have now firmed up to around the 37 x WS105 levels. WAF needs a fresh test off the back of this, with the 20-point premium expected to remain intact. A couple of stems remain looking for cover as we approach the weekend, but with TC2 still stuck at 37 x WS90 don’t expect many more gains in the Med just yet.
UK Continent
Another rather uninspiring week comes to an end here in the UKC MR sector with rates continuing to drag along the floor with TC2 around 37 x WS90. This, however, has become the backhaul run with the USG market spiking as we see many vessels opening in WAF, the Med and even some in the UKC set their AIS to USG. This partnered with a good level of xUKC and UKC/Med Handy stems, has kept tonnage on the move, clearing out our lists, but we still must be wary of a good number of TC14 vessels heading our way. WAF has certainly become the unpopular route and with returns so low, we see the traditional 20-point premium increase heavily to give incentive to Owners to fix. On paper a relatively good week in terms of list turnover, but unlikely to cause much positivity shortly as we expect a good restocking over the weekend.
Dirty Products
Handy
It’s been a slow week for Handies in the North. The list started out looking rather lean, however, unfortunately for Owners, inquiry was sluggish to surface leaving Owners unable to capitalize. The equivalent of 30 x WS217.5 for an unusual cargo caused a bit of a stir when details broke to the market on Thursday. We feel that for a ‘vanilla’ x-UKC levels still sit at the WS 197.5-200 mark, where it has stayed all week as more naturally positioned tonnage now begins to populate the list.
The Med saw an encouraging start to the week, with a consistent level of activity beginning to clear built-up tonnage. Levels gradually firmed from WS167.5 to around WS170 by the week’s end. At first glance, the list still looks lengthy but well-approved ships are somewhat thin, and tonnage at the top of the list is bunched East Med where Owners will need to hold their ground. A quiet end to the week has put a bit of a dampener on Owners’ spirits and we expect to see levels hold heading into next week.
MR
A lack of full-stem opportunities is the story for MR Owners across both regions this week as inquiry has stayed buried. Part-cargoes have once again been the main source of employment in the Med as early into the week units were clipped away. However, by week’s end, enquiry slowed leaving options for prompt coverage basis East Med if needed. In the North, units are thin leaving some planning ahead required for Charterers, although the allure of an elusive full-stem cargo should help to keep levels in around last done.
Panamax
Another quiet week for Panamaxes with little to report in the European market. Owners continue to ballast straight back to the USG, where employment is more consistent. A fresh test is needed to determine levels although the appeal of a laden trip TA should keep levels more in line with market expectations of the WS130 mark. In the USG, steady surrounding markets coupled with a general lack of disruption from Hurricane Milton has kept rates fairly flat for Panamaxes, with levels currently sitting around the 50 x WS140-145 range with little change here in sight for now.
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Source: Gibsons
