Americas clean Medium Range tanker owners are looking to carry crude oil, dirtying up Medium Range and Long Range 1 refined products tankers, to take advantage of higher time-charter equivalent earnings in the small and midsize crude tanker sector, reports Platts.
After a slowdown on major long-hauls, such as the 60,000 mt USGC-TA coming down 38% since the beginning of May to where Platts last assessed the route at w75, or $17.49/mt, for May 15 to a low for the year. Given the lower freight environment, shipowners are looking to carry crude oil, notably, in Long Range 1 tankers.
It takes multiple cycles of gasoil/diesel to make a tanker suitable to carry refined product cargoes again, signaling a strong move of shipowner discontent with clean tanker earnings for the region, valued below $9,000/d on a round-trip basis 60,000 mt USGC-UKC at w75, where Platts last assessed freight May 17.
Earnings favor Red Sea over USGC
Shipowners have struggled to fix trans-Atlantic voyages for the year, data from Commodities at Sea shows, as total completed loadings for the USGC-UK/Continent route at 3.1 million barrels loading off the USGC for NW Europe discharge were down from the 4.1 million seen in March and still lower than the 3.5 million transported for February.
However, shipowners sought to dirty up clean LR1s to put into Panamax service, which can carry 350,000 to 500,000 barrels of crude oil.
Midsize crude tanker time-charter equivalent rates jumped to record highs of roughly $60,000/d for Q1 of 2023, according to Teekay tankers’ first quarter 2023 earnings presentation.
“It pays $14,000/d better for a ship open on the US Atlantic Coast to ballast to the Red Sea and load there versus staying here,” a shipowner said.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: Platts
