- VLCC rates firm in AG market, WS105 for AG/China, WS58 for AG/USG.
- Eastbound Suezmaxes strengthen; owners push over 140 x WS65.
- Aframax market in Asia firm with high-$20,000/day earnings in Indo/North.
In April, the U.S. Trade Representative (USTR) rolled out an action plan aimed at curbing Chinese maritime dominance. These new measures are set to kick in on October 14, following a 180-day phase-in period, reports Gibson.
Fees and Vessel Classification
For vessels that are Chinese-owned or operated, there will be a fee of $50 per net tonne for each US port call, which will gradually increase over three years. This could make these vessels less competitive in the US market. If a vessel is built in China but not owned or operated by a Chinese entity, the fee will be $18 per net tonne for US port calls, although there are some exemptions for ballast voyages, trips under 2,000 nautical miles, vessels under 55,000 deadweight tonnage (dwt), or those with US beneficial ownership.
Vessels financed through Chinese leases are likely to be classified as Chinese-owned, which may lead operators to look for other options. The definitions around ownership are still a bit murky, with about 19% of tankers over 25,000 dwt potentially impacted.
Market Coverage and Exemptions
Almost 90% of clean product imports into the US are transported on vessels under 55,000 dwt, which are exempt from these fees. However, larger crude imports (over 55,000 dwt) coming from Latin America, including Brazil and Argentina, will incur fees if they are carried on ships built in China. There are enough non-Chinese vessels available to satisfy US demand, but we can expect some fluctuations in freight rates during this transition period.
Freight Rate Trends: VLCCs and Suezmaxes
- In the AG market, VLCC rates are holding steady around WS105; fixtures early in the week created a positive outlook, although momentum slowed later on.
- For eastbound Suezmaxes, rates are on the rise, with owners aiming for over 140 x WS65. Westbound rates are also showing strength due to limited tonnage.
Aframax Market in Asia
- Aframax rates saw an uptick late in the week, buoyed by local demand and robust markets in the AG and Vancouver regions.
- LR2 owners were vying for condensate stems from Australia, giving Aframax owners some added flexibility. The Indo/North market is assessed at 80 x WS130, with earnings expected to be in the high $20,000 per day range.
West Africa
- The VLCC market is active, with limited tonnage pushing rates. WAF/China is currently rated at WS96.5.
- Suezmaxes firmed, struggling to exceed 130 x WS115. Premiums to head East around WS7.5.
Mediterranean
- Suezmax rates stable, TD6 at 135 x WS142.5. Eastbound runs are estimated at $5.4M for Libya/Ningbo.
- Aframax rates improved, with Ceyhan moving to WS140; Libyan cargo WS150.
MR/Handy activity increased, tightening lists; WS150-155 expected for part cargoes.
US Gulf/Latin America
VLCCs firm, USG/China at $12.45, USG/UKC at $5.5M. Tight tonnage helped owners maintain the upper hand.
North Sea
Aframax market slightly stronger, achieving WS130+; further gains may be challenging.
LR and MR Products Market
- LR2s declined, LR1s held steady; TC1 ended week at WS120.
- AG MR market rates are weak due to ample supply; TC17 down to 35 x WS165, showing market floor.
UK Continent
MR rates lifted to 37 x WS130 (TA) and WS150 (WAF/Brazil).
Handy rates improved, tightening tonnage; 30 x WS160-165 expected next week.
Mediterranean MR/Handy
- MR market tightened; WS185 achievable with active enquiry.
- Handies firmed, 30 x WS155 going into the weekend; owners monitoring enquiry for next week.
Panamax
USG: TD21 trending around WS150; UKC-USG rates WS115-120.
The market is slower with moderate fixtures, awaiting fresh cargoes.
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Source: Gibson
