VLCC, Suezmax, and Aframax markets remain sluggish, with limited activity and stable to soft rates. Potential market improvement is anticipated in the coming weeks as conditions evolve.
VLCC
The calendar has turned the page to meteorological autumn and logic should dictate a firmer seasonal market, however, the current situation in the VLCC market can be summed up in one word: lethargic. Rates have stabilized in the low to mid WS 40’s for MEG/East runs, for now, but mostly down to the owning community having drawn a line in the sand. However, lack of perceived demand could support further downside risk. Activity has largely gone underground, but lack of reported details suggests no game changing fixtures have been concluded. In the Atlantic, the cargo flow is behind the curve, but tumbling oil prices will support the West/East arb. Quiet before the storm?
Suezmax
Is it the calm before the storm? You would like to think so and there are indeed reasons to be optimistic, but that’s for the weeks ahead. Playing what’s in front of us, there is a weaker feel in the Atlantic with a number of ships on the cusp of missing the natural fixing window, which is most noticeable in West Africa. Conversely, one region that feels a little undervalued is the US Gulf, which has fallen to 145kt x WS 60’s for a TA run, suggesting owners haven’t been monitoring the lists and if they had been, they might have held out for something closer to WS 70’s.
WS 115 is last done Fujairah/Singapore which pegs a MEG/East run at WS 110.This jump is due to a tight list of FOC ships which are in the hands of just a few owners. We also have less ships being recycled onto the East list due to West/East arb’ issues. Momentum with owners in this region.
Aframax
Very limited activity in the North Sea with a lot of programming of oil company tonnage taking a lot of the stems for the first half of the month. Rates have been stable with soft undertones in the first half of the week and with surrounding markets both in the US and Mediterranean not providing support/alternatives, the market looks likely to remain where we are in the short term.
The situation in Libya has had its effect on the Mediterranean Aframax market and where owners have been left with few alternatives, X-Mediterranean rates have borne the brunt of the uncertainty. History has shown that an influx of cargoes should hit the market once the dust settles and with this, owners will look to put pressure on rates as the tonnage gets put to work.
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Source: Fearnpulse
