The VLCC (Very Large Crude Carrier) market was uneventful yesterday, similar to the quiet observation of Pancake Day. The rate for MEG/East voyages on modern ships was around WS 57, with slightly lower rates for older, previously dry-docked vessels. The availability of ships and cargo seems to be in balance. Some charterers, like KPC, may find their options limited due to previous rate quotes that are no longer competitive, according to Fearnleys.
VLCC
Positive developments in Chinese crack spreads offer some optimism for the tanker market.
- Stronger Crack Spreads: Chinese gasoil crack spreads have returned to historical averages, while gasoline crack spreads are significantly higher than the historical average and at their highest point in months.
- Lower Brent Price: This strength in crack spreads coincides with Brent crude oil prices dropping to their lowest levels since 2021.
- Potential Market Drivers: Factors such as the OPEC+ production cut reversal, potential easing of sanctions on Russia, and/or increased production in the Americas could all positively influence the tanker market.
Suezmax
The Suezmax market saw positive movement in Europe and West Africa due to a busy day with numerous cargoes, tightening the available vessel list. TD20 and TD6 rates both increased by 2.5 points based on previous fixtures. With several cargoes still outstanding, rates in these regions could rise further due to stronger market fundamentals and sentiment.
The US Gulf market is uncertain. While Suezmaxes appear fundamentally strong, with tight tonnage for the 10-20 March window and strong WTI exports to Europe expected, Aframaxes are providing strong competition. A recent Aframax fixture at WS 150 (equivalent to 145×72.5) demonstrates their competitive pricing. With incoming ballasters in the mid-to-late second decade, charterers may prefer Aframaxes due to cost considerations.
Aframax
The week began quietly for Western Aframax markets.
- North Sea: Limited activity has resulted in a long vessel list with many prompt vessels available. Even with slightly softer US markets, ballasting remains attractive. The natural fixing window is around the mid-second decade, and the lack of activity may put downward pressure on rates.
- Mediterranean/Black Sea: Weak demand has led to marginally softer rates. Prompt vessels are available, and others with firm prospects will soon be open. Supply towards the third decade appears tight, but North African ports have availability until mid-month. Rates are currently sideways, with a softening tone as Suezmaxes attract more attention.
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Source: Fearnleys
