Suezmax Resilience : Navigating Houthi Attacks And Shifting Dynamics

VLCC

With January closed out and February yet to really kick off, rates in the MEG remain in limbo. Each consecutive deal able to chip a little off last done. TD3 sits at a little under WS 70, but deals are being confirmed a point or so below. Charterers looking to pick a target and enter the market quietly and efficiently. Therefore, without any open influx of February stems, rates may continue to feel the pressure as the MEG list looks well balanced.

Subtracting from the above-mentioned MEG list are a few unfixed ballasters (we count 9 or 10) heading for Cape, all by different owners. Therefore, increased competition will play a part. Low USD 10m’s from the USG are earnings too good to turn down, the same argument applies to USD 9m. But USG/Caribs/Venezuela volumes for February have been low, we counted 30. Yes, February is a shorter month, but both December and January had 50+. Without returns to those levels, further softening of rates likely. But, given the Red Sea, this market can change quickly and Suezmaxes certainly showing little downside.

Suezmax

Houthi maritime attacks are beginning to impact the market with firmer numbers reported for MEG/West (this trend is likely to continue). Red Sea transits have been a cash cow for insurers and there is a case to be made that they won’t push AWRP much higher as this risks driving all their business around the Cape, therefore we envisage a sweet spot approaching close to present levels.

The Atlantic is poised to push on from present levels with TD20 last done reported at WS 144 with no downside supported by a strong US market and spill over sentiment from the Red Sea.

Aframax

North

Very quiet week in the North Sea with hardly any fixtures done for local runs. Owners ballasting to better returns in surrounding areas as both USG and Mediterranean more active and very firm. Sentiment says that rates should be under upward pressure as vessels depart, but so far rates have remained steady in the fixing window. Increased activity needed to allow owners to push levels.

Mediterranean

Activity in the Mediterranean this week with the positive USG trends translating into the Mediterranean; tighter tonnage and weather delays helping to firm the market. Black Sea rates have pushed up to a point where Suezmax have looked twice and steadied the Aframax drive, though with Suezmax markets looking positive there may still be some small gains to be had on the Aframaxes. Sentiment somewhat steadier but forward potential.

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Source : Fearn pulse

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