This week, the shipping market across various sectors saw significant declines in rates, with LR2, LR1, MR, Handymax, VLCC, Suezmax, and Aframax all experiencing setbacks. Factors such as weakening demand and oversupply in certain regions have pressured freight rates, leading to a noticeable downturn across multiple routes.
LR2 Market Faces Downward Pressure
The LR2 market experienced a decline, as both TC1 and TC20 rates dropped. The MEG/Japan route (TC1) lost 31.39 points, falling to WS140, while the MEG/UK-Continent route (TC20) decreased from $4.36m to $3.94m. Conversely, in the Mediterranean/East market, TC15 rates for LR2s managed to rise by $100,000 to $3.27m, offering a brief respite.
LR1 Rates Drop Significantly
The LR1 market saw a significant downturn, with the TC5 index for the MEG/Japan route falling 33.43 points to WS139.98. The MEG/UK-Continent route (TC8) also experienced a 25% drop, with rates falling to $2.84m. However, on the UK-Continent, the TC16 index for the ARA/West Africa route gained 9.17 points, reaching WS123.89 due to some early-week activity.
MR Market Rebounds from Highs
The MR market in the MEG witnessed a dramatic downward correction this week. The TC17 35kt MEG/East Africa index shed 40.72 points, reaching WS185.71. In the UK-Continent, the TC2 index for ARA/US-Atlantic Coast reached WS180 mid-week before falling back to WS167.19. Similarly, the TC19 37kt ARA/West Africa route peaked above WS200 before dipping to WS189.06.
- USG market: Freight rates for the US Gulf dropped across multiple routes, with TC14 (38kt US-Gulf/UK-Continent) falling to WS115.71 and TC18 (38kt US Gulf/Brazil) dropping from WS185 to WS165.71.
- MR Atlantic Triangulation Basket TCE: Declined from $28,100 to $25,020.
Handymax Rates Continue to Improve
The Handymax sector saw improvements this week. The Mediterranean TC6 index increased by 47.23 points to WS221.67, while the UK-Continent TC23 30kt Cross UK-Continent route rose from WS190 to WS193.89, reflecting positive market sentiment.
VLCC Market Experiences a Sharp Drop
The VLCC market saw a significant crash, with the Middle East Gulf to China trip (TD3C) falling 23 points to WS54.15, resulting in a daily TCE of $31,568. In the Atlantic, the rate for the West Africa/China route (TD15) fell 18 points to WS59.33, while the US Gulf/China route (TD22) saw a drop of $1,285,000 to $8,750,000.
Suezmax Market Weakens
Suezmax rates experienced a weaker trend, although the declines were not as dramatic as in the VLCC market. The Nigeria/UK Continent route (TD20) fell 9 points to WS76.67, and the Guyana/UK Continent route (TD27) dropped 5.5 points to WS73.67. Other Middle East routes also saw small declines, including the CPC/Med route (TD6), which dropped nearly 2 points to WS88.25.
Aframax Market Sees Mixed Activity
In the North Sea, the Cross-UK Continent route (TD7) remained stable at WS110, resulting in a daily TCE of around $19,691. In the Mediterranean, the Cross-Mediterranean route (TD19) saw a rise of 7 points to WS131.78, offering a daily round-trip TCE of $34,055. However, the Atlantic market saw further slackening, with the East Coast Mexico/US Gulf route (TD26) and the Covenas/US Gulf route (TD9) both dropping to WS117.
The shipping market is facing a period of decline across several key sectors, with weaker demand, increasing tonnage, and a lack of fresh activity exerting downward pressure on rates. While certain markets like Handymax have shown improvements, the broader trend is one of downturn, with uncertainty remaining a dominant factor for the coming weeks.
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Source: Baltic Exchange
