Freight rates for oil product tankers in Asia have been escalated recently owing to reduced availability of vessels and fuels were shipped to the United States and Mexico in the stir of Hurricane Harvey. Bigger tankers is put on usage as provisional storing for gasoil as sellers hold fuel on prospects of restricted supply and enhanced claim in the flag end of the year, which has paved the way for shortage of vessels. Winson Oil, the Oil agent for example, has been destructively buying in Singapore, shattering up millions of gasoil barrels. The freight rates for Long-Range 1 (LR1) tankers, intended to carry about 55,000 tonnes, scaled to a height of nearly nine-month for the Middle East to Japan route on the World Scale (WS), a shipping index benchmark, at 143 WS on Sept. 18. Similarly the rates for LR2 tankers, capacities of around 75,000 tonnes, scaled near a one-month high for the same route at 119 WS point on Sept. 18. Normally, LRs are used to ship naphtha from the Middle East to Japan, on contrary they are used to ship gasoil and jet fuel to various other countries by the Middle East, India, Singapore and South Korea among others. Still, there has been a current urgency to use LR tankers and smaller medium-range tankers to ship middle distillates to the United States and Latin America.
Escalation of MR tankers freights:
The demand has declined from US, as refineries have steadily originated back and since several vessels are still in Europe, due to Hurricane Harvey that struck last month, which had been shipping fuel to the United States. The data of a shipping brokerage revealed that WS points for medium-range (MR) tankers from Singapore to Japan, for instance has escalated to 203 on Sept. 18, a growth of 38% as against 147 on Aug. 1. Similarly the rate for MRs in the Singapore-Australia route is at 260 WS points which was 20 % higher than 217 WS points on Aug. 1.
Reports from vessel tracking and monitoring:
A source monitoring shipping fixtures, states that Hurricane Harvey, Irma and the earthquake in Mexico had provided backing to tanker demands and increased the shipping flows from Far East/Singapore to U.S. West Coast/Mexico as well as the Middle East/West Coast India to U.S. East Coast. An information from the shipping source projected that 15 to 20 middle-range tankers and 10 to 15 LR1s were mobilized to ship product between Asia, U.S. West Coast and Mexico. Even well ahead of storms and earthquakes that had struck the U.S. and Mexico, the refineries have closed down their operations, freight rates for MRs have been up due to demand for fuel from Middle Eastern. Yet another second source which tracks tankers, states that the rates will continue to remain high till October mid at least. It generally takes a month for the ships to turn back from the U.S. and back to North Asia.
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Source: Reuters
