The sentiment across the tanker market segments is currently mixed, with perceived weakness in the Very Large Crude Carrier (VLCC) sector contrasting with latent bullishness driven by tightening supply in the Suezmax segment.
Very Large Crude Carrier (VLCC)
The VLCC market is currently being driven by perception, with a widely held belief that a downturn is imminent as charterers attempt to leverage the start of the Golden Week holiday in China to soften freight rates. The market has indeed shed about 10-15 Worldscale (WS) points on the Middle East Gulf (MEG) to East route. However, this perceived weakness is complicated by a major Chinese charterer reportedly repeating a WS 90 MEG/China fixture, suggesting underlying strength. The market remains uncertain, with very few fixtures concluded for the mid-October period and onwards. An opening of the West/East arbitrage and corresponding Atlantic fixtures has added a layer of optimism to the western market. While some further rate reduction may occur, the overall outlook is more complex than a simple downturn.
Suezmax
Sentiment in the Suezmax market has suffered due to a period of silence this week, despite strong underlying supply and demand fundamentals that suggest stability. Most of the second-decade West Africa requirements and much of the Guyana demand appear to have been covered with few reported deals.
However, the US Gulf (USG) market is showing signs of becoming bullish. As of today, seven vessels are reported to be on subjects in the USG, leaving zero vessels in ballast and only three scheduled to sail in the next ten days. This severe tightening of local availability means outstanding USG/Guyana cargoes will be forced to pull vessels from the Atlantic, which owners hope will translate into a corresponding rise in rates across the broader market. Meanwhile, the MEG remains quiet due to an increase in available tonnage and declining sentiment stemming from the VLCC market’s downward trend.
Aframax
North Sea
The North Sea market started the new month slowly following a rush of activity last week to clear remaining September requirements. Available tonnage remains thin, but the presence of relet vessels and a current lack of new fixture activity are expected to keep the market steady as it moves into the second-decade fixing window for October. Tonnage continues to be pulled away by US markets, though this is largely balanced by vessels returning laden from those same destinations.
Mediterranean
The Mediterranean market has been active under the radar, with charterers quietly securing vessels at levels generally consistent with last-done rates. The fixing window is now approaching mid-October dates across all ports. The tonnage list is currently balanced against the volume of available cargoes, and with the fixing window extending further out, owners are in a position to be selective regarding their cargo choices based on voyage details and dates.
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Source: Fearnleys
