VLCC
A sluggish week in the VLCC sector; TD3 rates dropped to the mid ws30’s, but with rising bunker prices and falling returns owners’ resistance to lower rates. Returns moved closer towards OPEX (for scrubber-fitted units) and below OPEX for those burning VLSFO. Ships are being picked off under the radar and while sufficient supply remains, rising bunkers are also increasing owners’ opposition to lower levels. Rates hovering in the mid-high 30’s and with some, one to two weeks before October stems come into play. We expect another 35 or so fixtures to go. The Atlantic, which had been holding higher, is facing more ballast units joining the fray and rates are softer. Rumours persist of ws39 concluded WAF-East, but yet unconfirmed. USG>TA was concluded at $2,500,000 and is likely to be repeated, if not lower is seen. Eastbound rates will test below $7,000,000.
Suezmax
Demand in the West was a touch stronger this week, enabling a slight rebound in rates after bottoming out on Monday-Tuesday. The boost in cargo inquiries helped absorb some of the excess tonnage, which improved tonnage fundamentals within the area and created some stability from last week’s downward spiral. The TD20 route rallied back up to ws75 for the front half of the week before slipping back down to ws72.5 levels entering Friday. In the Americas, Suezmax inquiries took a breather this week as rates continued their downward correction off the back of a sluggish Aframax sector and a build in tonnage for 1st half September dates. Rates for USG>UKCM slipped down 7.5points to ws52.5 We levels (basis 145,000mt cargo) while USG>EAST trade also followed suit as rates stumbled lower with Singapore discharges commanding $4,600,000 levels and Long East at $5,150,000 but remains untested. BDTI- TD20 ended the week settling at ws72.27, which is up 1.95 points from this time last week.
Aframax
Another week of malaise in the Aframax market continues to keep downward pressure on rates for all USG>EC Mexico/Caribs voyages, and similar pressure on STS rates as well. Even with the holiday-shortened week, stems simply did not materialise, and as such, position lists were overpopulated, forcing owners to look hard at what was on offer. We recorded a meager 8 fixtures for the week in total, which obviously leads to the continuation of softness in the region. Rates for EC Mexico to the US Gulf have broken the ws100 level (usually a psychological barrier for owners) and ended the week at the ws95 level. Transatlantic voyages for Aframaxes have dropped below the ws110 level, and no turnaround appears in the near term. Standard 3-day STS lighterings saw a reduction from $390,000 / $45,000 down to $340,000 / $35,000, and these rates look to continue to drop as well. One limiting factor in this rate decline is the continuing firming of bunker prices, which eats away at owners’ TEC earnings, but even this won’t be enough to turn the sentiment around when position lists remain inflated with tonnage. We look for continued rate declines into next week.
MR
After enduring a few weeks of positive gains, TC2 experienced an abrupt reversal with freight levels sliding from ws220 all the way down to ws170. Mounting tonnage helped the market fall in “clumps” each day before ultimately settling by Friday. Premiums for West Africa and Brazil still stand at 10 and 15 Wordscale point spreads, respectively. MED>TA is still holding steady at ws180 (basis 37,000mt cargo). Expectations are for further stabilization next week as an open Transatlantic arbitrage is predicted to continue in the short term. A return from the Labor Day holiday in the U.S. saw renewed activity, particularly for USG>EC Mex voyages. A slew of fixtures were concluded ranging from l/s $675,000 to $750,000 all date dependent. USG>CBS peaked at l/s $950,000, but some downward sentiment now has the route being assessed closer to l/s $800,000. TC14 hovered mostly in ws130-135 range (basis 38,000mt cargo) all week, but ws125 on a Russian history vessel has also been posted. USG>Brazil is also showing some ease with rates dipping from ws235 to ws225 (basis 38,000mt cargo), while USG/Chile still stands sideways at the l/s $2,900,000 mark. A quiet end to the week combined with some leftover available tonnage points to a softer opening on Monday, but it may not take much to witness any quick turn arounds.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe
Source : capital link
