The past week has seen a significant downturn in freight rates for LR2 (Long Range 2) product tankers, both East and West of Suez, indicating a softening market across key clean petroleum product routes.
VLCC
The VLCC (Very Large Crude Carrier) market has experienced a significant downturn in week 26, largely attributed to the apparent “ceasefire” between Iran and Israel. This de-escalation of geopolitical tensions has effectively “quelled nerves,” leading to a considerable slackening in rates as the war risk premium evaporates.
- Middle East Gulf to China (TD3C): The rate for the 270,000 mt trip has collapsed by 26 points to WS55.50, losing all its recent gains. This translates to a daily round-trip TCE of $35,281.
- West Africa to China (TD15): In the Atlantic market, the rate for the 260,000 mt voyage has fallen by 12.5 points to WS60.13, yielding a round voyage TCE of $41,319 per day.
- US Gulf to China (TD22): The rate for the 270,000 mt route from the US Gulf has eased by nearly $300,000 to a little less than $7,700,000. This reflects a daily round-trip TCE of approximately $38,700.
Overall, the VLCC market has seen a sharp correction downwards as the speculative “geopolitical premium” faded.
Suezmax
The Suezmax market has shown a degree of stability in week 26, with attention largely focused on the more volatile VLCC segment. Despite the general market sentiment, some Suezmax routes have even seen slight improvements in TCE.
- Nigeria to UK Continent (TD20): The rate for the 130,000 mt voyage remains at WS89.72, translating to a daily round-trip TCE of $36,180. This actually represents an increase of over $1,600 per day from the previous week, indicating underlying firmness on this route.
- Guyana to UK Continent (TD27): The 130,000 mt route from Guyana added 1 point to WS87.5, giving a daily round-trip TCE of approximately $34,400 (an increase of over $2,000 per day from last Friday) basis discharge in Rotterdam.
- CPC to Augusta (TD6): The 135,000 mt route stayed around the WS104 level, providing a daily TCE of a little over $38,200 (about $1,600 per day better than a week ago).
- Middle East Gulf to Mediterranean (TD23): In the Middle East, as tensions eased, the market for the 140,000 mt trip via the Suez Canal saw its rate reduced by 3 points to about the WS100 mark.
Suezmaxes appear to be holding relatively steady, with some Atlantic routes showing slight positive momentum even as the Middle East cooled down.
Aframax
The Aframax market has experienced a mixed week, with some routes recovering while others saw declines. The shorter Atlantic routes, in particular, showed volatility.
- North Sea – Cross-UK Continent (TD7): The rate for the 80,000 mt route recovered by 2.5 points to WS122.5. This translates to a daily round-trip TCE of about $34,400 basis Hound Point to Wilhelmshaven.
- Mediterranean – Cross-Mediterranean (TD19): The rate for the 80,000 mt trip lost about 1 point to the WS135 level. Basis Ceyhan to Lavera, this shows a daily round-trip TCE of a little over $31,000.
- Atlantic Shorter Routes (TD26 & TD9): Across the Atlantic, the shorter routes saw a week of gains and losses, with rates climbing early in the week before falling back on Thursday.
- The 70,000 mt East Coast Mexico/US Gulf route (TD26) has fallen 3-4 points week-on-week to the WS149 level, resulting in a daily round-trip TCE of about $31,400.
- The 70,000 mt Covenas/US Gulf route (TD9) has also fallen 3-4 points week-on-week to the WS145 level, translating into a daily round-trip TCE of about $29,400.
- Trans-Atlantic – US Gulf/UK Continent (TD25): In contrast to the shorter Atlantic routes, the 70,000 mt trans-Atlantic route has risen 6 points to the WS148 mark. This provides a round-trip TCE basis Houston/Rotterdam of just shy of $34,800 per day.
The Aframax segment is displaying a nuanced performance, with demand factors influencing regional rate movements.
Did you subscribe to our Daily newsletter?
It’s Free! Click here to Subscribe!
Source: Baltic Exchange
