The West African market is showing moderate activity. Available vessels in the Far East are gradually decreasing. However, there’s an oversupply of ballasters for voyages later this month and into mid-March, reports Breakwave Advisors.
MR Supply Increase
MR supply in Southeast Asia has increased due to reduced utilization on the Southeast Asia-to-Oceania route (TC7) and a growing number of vessels deployed for shorter intra-Southeast Asia voyages.
Strong intra-Southeast Asia CPP flows are reducing the volume of cargo available for export to the Oceania region. Upcoming Ramadan-related demand in Southeast Asia is expected to drive higher gasoline consumption, potentially limiting supply availability for TC7.
Simultaneously, increased intra-Asia demand for MR tankers may arise to support the transportation of gasoline within the region.
Aframax Voyage
Current Aframax voyage counts on the US Gulf-to-NW Europe route (TD25) are around the seasonal average, although lower year-over-year and month-over-month.
Limited European crude demand, particularly during the refinery maintenance season, has contributed to this subdued activity.
High prompt vessel availability in the US Gulf, coupled with weak demand, is keeping TD25 rates low. This may incentivize increased fixing of Aframaxes over Suezmaxes as the freight rate differential between the two vessel types has narrowed.
Suezmax rates recently experienced a boost following the recent US sanctions on Russian vessels. Increased demand from China and India, driven by a combination of sentiment and actual replacement buying, supported this rally.
Over the longer term, Suezmaxes have gained market share from Aframaxes on the Transatlantic route. However, if Red Sea transits resume, some Suezmaxes that have established themselves in the Atlantic Basin may return to service on the Middle East Gulf-to-Europe route.
Diesel export
Undelivered diesel volumes on MR tankers departing Russia have increased significantly. Several tankers have exhibited rerouting behavior, with some vessels floating fully laden in the Mediterranean.
This surge in undelivered cargoes highlights the limited market appetite for Russian diesel supply, particularly as middle distillate demand weakens in the Atlantic Basin.
Despite record exports of Russian diesel in January, which supported MR tonne-miles, the market’s inability to absorb this supply has resulted in stranded cargoes. This situation underscores the potential difficulties Russia may be facing in finding buyers for its diesel exports, further emphasizing the weakness in the European middle distillate market.
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Source: Breakwave Advisors
