Crude Oil
Middle East
VLCC rates recovered during the second half of the week, as a rush of end-May stems combined with the release of early June cargoes passed the impetus back to Owners. Charterers are expected to attempt to hold off for a bit to take the steam out of the market but the tonnage list is limited after a large volume of fixing within the last week. Today we are calling 270 AG/China at ws 72 and 280 AG/USG is now at ws 41.5 level.
The AG remains steady with little movement in rates to head West and minimal enquiry. Today for AG/West we estimate 140,000mt x ws 62.5 via the Cape. To head East, the market is around ws 112.5, with tonnage readily available and slightly less likely available for those who can take older tonnage.
Its been a much improved week for Aframax Owners in the AG. Rates began the week at circa 80,000mt x ws 180 level for AG/East. However, a lack of quality ships and warming markets in both the Indo and Med regions, has enabled Owners to push for more than last done. One Charterer is reported to have paid 80,000mt x ws 230 for an AG/Colombo run (these runs often pay 10-15 points over AG/East). Owners should be bullish and looking to drive TD8 over ws 200 next week.
West Africa
Sentiment amongst Owners remains firm as we see more cargo for both West destinations as well as usual East runs. Rates here are benefiting from the upturn in adjacent markets, especially the USG area. Available tonnage for the first part of June is beginning to thin out and Charterers will need to act carefully, if they want to avoid paying over last done. We estimate that the current rate for WAF/China should be around ws 73.5 level.
Suezmax markets in West Africa have steadied towards the end of the week despite turbulence early on. With minimal enquiry outstanding, rates for TD20 stand around 130,000mt x ws 110 today.
Mediterranean
TD6 remains steady, with rates for CPC/Med hovering at around 135,000mt x ws 110. Rates to head East are slightly firmer, with less willing to commit to going East. We freight at around $5.4M for Libya/Ningbo via the Cape.
The market conditions coming into this week were favourable for the Mediterranean Aframax sector, with many cargoes still available and Charterers eager to secure immediate working dates. Owners were in a position of strength and as a result, freight rates started to increase significantly. By the end of the week, ws 195 was repeated for a Ceyhan run. However, despite this positive outcome, Suezmax’s taking out part cargoes has limited any further rate increase. The closure of Trieste and delays in other Mediterranean ports will take some time to resolve, adding further fuel to the fire. Additionally, the tightening conditions in the surrounding Suezmax markets may limit Charterers’ options in the coming weeks.
US Gulf/Latin America
It’s been another bumper week in USG as the cargoes kept on coming. Rates are beginning to move towards the $10M mark for long East as Owners turn the screw. Brazil rates have also started to recover after a dip and both sectors should continue to be a happy hunting ground for Owners in the coming week. Today we expect a USG / China run will fix in the region of $9.75M, while we estimate a Brazil/China run is paying around ws 71 level.
North Sea
Quieter than its neighbors this week and typically lacking in fluctuation. We saw plenty of ballasters for TA and the Med leaving the earlier side of the list on the mixed side. Levels are now trading in the mid to high ws 140s. There is a small undercurrent of optimism, but in reality we can’t see this market ticking up by more than a few points.
Clean Products
East
It was a very busy week for the LRs in the East, With rates on all sizes seeing large positive corrections, leaving both lists very tight till early June dates. $7.25M is on subs for a LR2 Westbound (Ex AG) is a line in the sand this side of the weekend. But stems ex Red Sea given restrictions and availability have pushed greatly with $5.15m on subs for a Gizan/West (some $2.0M up in the last 7days). TC1 is on subs at 75,000mt x ws 240. However, it is expected that all these rates push on next week. The LR1s had a manic start to the week and only eased off towards the later stages as the list simply ran out of tonnage. TC5 is on subs at 55,000mt x ws 270 and AG/West is at $5.8m levels. Expect to see some very bullish ideas from Owners come Monday.
MRs East of Suez have faired well off the back of a tightening list from activity seen last week. With availability in the next 10 days tight, and levels firming, cargoes have been quoted out up to the end of the month to try slow the momentum of rate increase and secure firm units in ballast. One stem with voyage specific restrictions saw TC17 climb to ws 400 with Owners looking to secure a repeat at, or close to that level for a more vanilla run. We close with sentiment steady to firm but a quiet day to close the week has the potential to soften sentiment come Monday.
The North Asia MR market is busy with a clearance of backlog tonnage this week with good activity off end month dates. The market went down first and took a U-turn later. Korea/Singapore was done at $900k at the end of the week which was $25k lower than last week. But the backlog of tonnage is more or less cleared and the fixing window is slowly adjusting to normal now so we will see June cargoes from next week. Activity in The Straits area seemed to slow down but the market was supported by a mix of off market cargoes and a healthy AG market. ECI open units would still ballast to the AG where the market is picking up, even slowly. TC7 was repeated at ws 315.
Mediterranean
It’s been another volatile week for the Handys here in the Med with rates bouncing around throughout. We began the week with XMed trading at the 30,000mt x ws 240 mark but with the list looking tight, WMed and a couple restricted stems coming into play we soon saw rates jump. 30,000mt x ws 295 was achieved on Tuesday and then repeated a couple of times on Wednesday. Since then however, enquiry has slowed and as a result we have seen rates start to come under pressure. Last done XMed is now at the 30,000mt x ws 265 mark but with the list growing and little left to cover, expect further losses to come.
Finally to the Med MR’s, where we have seen some movement on rates this week both up and down. 37,000mt x ws 240 was the call for Med/TA on Monday morning, but with the list looking tight there were some opportunities for Owners to push levels. By midweek, vanilla runs soon settled at the 37,000mt x ws 245 mark after 37,000mt x ws 260 was achieved for a prompt Naphtha run. However, over the backend of the week we have seen limited enquiry and with TC2 trading at sub ws 200 levels we have seen some negativity start to creep into the Med. 37,000mt x ws 235 is now on subs for a Med/UKC run and with nothing left to cover, Charterers will look to continue piling on the pressure.
UK Continent
Levels close the week at 30,000mt x ws 250 for XUKC as cargoes have been drip-fed into the market throughout. Handy supply has been tight on the front end of the tonnage list but with MRs in play, Charterers have been able to lean on them to cover their handy exposure. MRs have capped Handy freight and until longer hauls improve expect more of the same to happen here for the short term.
TC2 has continued to kick the can down the road this week as freight has traded between 37,000mt x ws 190-195 even with a higher number being paid ex Immingham. The talk of the town has been the Med market (37,000mt x ws 245 for TA) which has caught the eye of some UKC vessels as they have ballasted down to take advantage of the premium on offer. Looking at the tonnage list, MRs have competed on 30kt clips which will only see these vessels reopen next week as heading short and with the states market softening, USAC ballasters have decided to head towards Europe which will keep a good resupply of vessels on our list for the next fixing window. There has been limited fixing opportunities on offer down to WAF on the MRs with a fresh test now required there. Steady for the short term.
Dirty Products
Handy
This week in the handy market has been a mixed bag of activity, with most fixtures towards the end of the week being carried out off market. In the North, the week started with a slow, yet consistent firming of levels and the majority of tonnage due to open up mainly consisting of WMed ballatsers. Levels have consistently firmed with ws 245 reported on subs at the start of the week moving up to ws 270 at time of writing. Looking to next week, sentiment seems to be siding with Owners which will see Owners again looking to push levels and take advantage of a lack of availability.
In the Med, activity started strong with enquiry clipping away at the list, leaving it tight for prompt coverage. We have seen a wide range of rates from as low as ws 210 to the end of the week with a reported ws 250 reported on subs. As far as market guidance is concerned, This can be explained by tonnage being slow to repopulate lists off of natural fixing windows basis West Med and a lack of tonnage basis East Med, creating a firm but load-dependent fixing range.
MR
MRs in the north remain illusive and where as such, Charterers have needed to be a tad more understanding of the current sentiment. Either looking forward or taking larger units on a part cargo basis being the only strategy at Charterers disposal, with fresh tests showing positive volatility.
MR owners in the Med will be the happier of the two as they have seen more liquidity, however, tonnage is starting to build in the Western Med which could put a slight dampener on spirits. That said, the lists are far from stagnant where MRs take part cargo employment.
Panamax
A slightly busier week for Panamaxes overall as questions have been asked for an array of voyages, however, some of this is yet to materialize into firm enquiry. Looking ahead, we expect rates to continue to be case-by-case as the desire to reposition in the US will take heed over pressing for improved earnings. Elsewhere, In the Caribs, weakening Afra markets are applying negative pressure, this can be seen by a slight, but consistent downtrend in rates for Caribs/USG.
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Source: Gibson
