A Tale of Two Tanker Classes

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tanker

In a stark reminder of how volatile shipping markets can be, sentiment in the previously weak Asian Aframax market has flipped while the LR2 market continues its downward slide. The Aframax market in the East of Suez firmed rapidly with rates for the Indo/Japan route up by w22.5 points w-o-w to w132.5 due to a flurry of pre- Lunar New Year activity.

Among fixtures heard, BP placed a vessel on subjects for an Indo-Aus voyage at w132.5 basis 80,000 mt.  Rates for the AG/East route gained by w5 points from the previous week to w115.  Prompt tonnage in Asia is tight especially in the AG region, supported by a strong Med market which has drawn some ballasters.  With average daily earnings for TD14 crossing the $10,000 mark at $11,514 (up by 28% w-o-w), earnings are expected to continue picking up.  On the other side of the coin, the Asian LR2 market has been sluggish for the past week.

Rates for the key AG/Japan route dropped by w22.5 points from the week before to w112.5 on the back of a longer tonnage list especially in the AG.  Average daily earnings for TC1 are within the $9000- $10000 level, down by around 35% w-o-w.  Muted winter heating demand for gasoil in Europe and higher distillate inventories in the ARA region (up by 9% w-o-w for the week ending 12 Jan) has kept the East-West gasoil arb closed, resulting in less ships moving along the AG/Europe routes.  Furthermore, refinery outages in the Middle East and India may lead to more deferred cargoes as well lower CPP exports.  The recent fire at ADNOC’s 800 kb/d Ruwais refinery and subsequent outage of half of its capacity has led to the deferring of at least two distillate cargoes for late January loading.  ADNOC is a regular exporter of jet fuel to Europe and naphtha to Asia.

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Source: OFE Insights

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