The recent publication by the Office of the United States Trade Representative (USTR) of their action plan to address concerns regarding alleged Chinese dominance in the maritime sector has been met with a sense of relief by the majority of international shipping companies. This positive reaction stems from the fact that most of the initially speculated measures have been considerably scaled back in the final plan, reports Gibson.
Crude Oil
East
Following a positive period in the Arabian Gulf (AG) for VLCCs after Easter, this momentum continued into the shortened week. A healthy flow of inquiries combined with limited tonnage availability led to further rate improvements. Looking ahead to the second decade of May stems, with current fixtures already in double figures, the market’s reaction early next week will be closely watched. Today’s assessments are AG/China at WS72 and AG/USG at WS38.5.
Owners seeking Basrah/West voyages can likely achieve rates in the mid-WS50s as Suezmax vessels compete for these routes westward. More units are expected to ballast to West Africa (WAF) over the weekend, where the market continues to support owners. Charterers may find it challenging to push rates down here, especially with larger VLCC sizes gaining in the AG market. With limited voyages to West Coast India (WCI), the top end of the rate range hasn’t been eroded, and owners might aim for further increases next week, although currently, 140,000 mt at WS55 via Cape/Cape is the prevailing assessment.
Asian Aframax rates saw a downward trend this week, with only one Australian-bound cargo emerging towards the week’s end. Owners with open positions will likely face increased idle time as the fixing window shifts into the second decade of May. However, the region could find support if earnings in the AG continue their upward climb. While steady Vancouver loadings have attracted some ballasters away from Asia, it hasn’t been enough to balance the Singapore tonnage list. Overall sentiment in Indonesia is soft, with the TD14 route assessed at 80,000 mt at WS126, a drop of WS5 points from the start of the week.
West Africa
The VLCC market in West Africa this week hasn’t lived up to some expectations in terms of excitement. Reports of a few deals being concluded have circulated, but these have been largely under the radar, preventing significant momentum from building. Looking forward to next week, the focus will be firmly on end-May stems, supported by a healthier tonnage list. For now, however, rate levels and overall sentiment remain firm. Today’s assessment for WAF/East is in the region of WS69.5.
Suezmax markets in West Africa have shown considerable volatility this week, but the underlying feel remains firm as the week concludes. This trend is likely to continue into next week as available tonnage for early positions is absorbed. Without pressure from larger VLCC sizes or a significant influx of ballast vessels, further rate improvements could be seen. Rates for the TD20 route are currently firm at WS120.
Mediterranean
With ongoing fixtures for cross-Mediterranean (XMed) stems steadily reducing available tonnage, the Suezmax market here has tightened considerably, leading to an overall firm sentiment. While Black Sea stems continue to enter the market at a stable level of 135,000 mt at WS135, these levels are expected to persist. For longer voyages eastward, owners are optimistic, with Libya/Ningbo rates currently around the $5.7 million mark.
Following the Easter weekend, Aframax levels in the Mediterranean reacted negatively, dropping WS15 points for the benchmark Ceyhan run to WS180. However, owners managed to halt further declines, with this level becoming a sort of reference rate for the remainder of the week, with significant undisclosed business concluded. Looking ahead, with the tonnage list appearing quite balanced, the short-term outlook remains steady.
US Gulf/Latin America
The US Gulf region this week didn’t produce the anticipated surge in activity for VLCCs. Cargoes were released gradually, providing some positivity, but the Americas lacked the real momentum seen in the AG. Next week could be interesting, as the US Gulf market is currently stable, while rates in surrounding regions are starting to feel like they might be peaking. Today’s assessments are USG/China at $8.50 million and Brazil/China at WS67.5.
North Sea
The North Sea Aframax market experienced an interesting week. While other markets have felt downward pressure, the North Sea has remained firm, trading around WS140. Little change is expected heading into May, despite an anticipated influx of tonnage from the US. The market appears stable for the time being.
Clean Products
East
The Long Range (LR) tanker market in the East experienced a busy week. For LR2s carrying naphtha, a re-test of rates is anticipated, given that multiple fixtures are on subjects at 75,000 mt at WS125, with the next likely level being WS130. Westbound voyages haven’t seen as much activity, but the assessment for the end of the week is around $3.75 million.
The LR1 market is extremely tight for prompt loading dates. Although a fixture at 55,000 mt at WS150 was reported and subsequently failed (released), owners will be aiming to repeat this level on the next fixture. Similar to LR2s, Westbound voyages for LR1s haven’t been extensively tested but are currently assessed at around $3.0 million. Charterers with immediate requirements may face a challenging situation due to the tight availability of vessels for early May loading.
UK Continent
The Medium Range (MR) market in the UK Continent has been busy in the week following the Easter break, significantly reducing the available tonnage list. Sentiment has strengthened throughout the week, and rates for the 37,000 mt Transatlantic (TA) route have edged up to WS152.5. The May 1-5 loading window is now active, and with some remaining cargoes to be covered, there’s a possibility of further rate increases. However, with the UKC now performing better than other markets, it could attract tonnage from various regions, potentially putting the recent rally at risk.
The Handy-size market in the North Sea saw a good amount of fixing this week, and levels have managed a slight recovery. A few cargoes remain uncovered for the early May window, and with MR rates showing some upward momentum, further firmness in Handy-size rates is expected.
Mediterranean
The fact that Mediterranean MR rates have been lower than those in the UKC for some time might indicate a typical summer slowdown is approaching. The market has been fairly active, with some off-market fixtures clearing out some tonnage, but overall supply appears healthier compared to recent weeks. Rates currently stand at 37,000 mt at WS145 for Transatlantic voyages and around WS165 to West Africa (WAF). With a steady supply of vessels from a slower WAF market, it’s largely anticipated that rate direction will be influenced by the North (UKC market) rather than by activity within the Mediterranean itself.
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Source: Gibsons
