The Baltic Exchange has introduced two new Aframax tanker benchmarks to reflect the significant growth in Canadian crude oil exports to the Asia-Pacific region, a trend driven by the completion of the Trans Mountain Expansion (TMX) project.
New Aframax Tanker Benchmarks
The Baltic Exchange has launched two new Aframax tanker benchmarks, designated TD28 and TD29. The new indices were developed in direct response to market needs, following suggestions from its advisory councils and extensive consultation with industry stakeholders.
- TD28 Route: Tracks voyages from Vancouver to Ningbo, China. This benchmark is now live on the Intercontinental Exchange (ICE) as of October 13.
- TD29 Route: Will assess voyages from Vancouver to the Pacific Area Lightering (PAL) zone off the US West Coast. This route is currently in development.
- Vessel Type: Aframax vessels are the standard for these shipments, as fully loaded VLCCs cannot load at the Vancouver terminal.
Impact of the Trans Mountain Expansion (TMX)
The new trade routes emerged as key flows following the completion of the Trans Mountain Expansion (TMX), which began commercial operations on May 1, 2024.
- Pipeline Capacity: The TMX project nearly tripled the pipeline’s capacity, from approximately 300,000 barrels per day (bpd) to 890,000 bpd.
- Terminal Capacity: The upgrade has drastically increased the export capacity of Vancouver’s Westridge Marine Terminal, which can now handle up to 34 Aframax calls per month, a significant increase from the previous five calls per month.
Strategic Rationale
The new benchmarks address the need for price transparency as Canadian crude expands its access to Asian markets:
- Trade Flows: The two primary methods for shipping the crude are direct transport across the Pacific to China (reflected by TD28) or lightering onto larger tankers off California (reflected by TD29) before continuing east.
- Market Transparency: The growth of these specific trade flows, particularly amid heightened demand for Canadian crude as an alternative supply source, increased the demand for independent, reliable pricing references.
- Benchmark Development: The routes followed the Baltic’s rigorous index creation process, including blind trials, public consultation, and testing, ensuring they meet criteria for liquidity and commercial relevance.
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Source: Baltic Exchange
