VLCC rates remain low, with balanced positions but potential for upward movement. Suezmax and Aframax markets face pressure, with limited activity and declining rates, especially in the Mediterranean, reports fearnpulse.
VLCC
The last couple of days the MEG has been in that twilight zone in between months with Saudi September stems reportedly due tomorrow. However, as it turned out August was far from “sold out” and proceedings kicked off this morning with a few end month cargoes and a couple of early September stems from the likes of Kuwait and UAE, charterers seemingly sensing the potential upside. The Atlantic also showed signs of picking up yesterday with a handful of USG export cargoes emerging, and we got a Brazilian export cargo this morning. There’s currently very little disparity TCE wise between MEG- and West Africa/East. The extra 5 points give/take for the longer voyage mostly cover the extra cost, so owners with ships ballasting from the East will be reluctant to lock in a long commitment into a perceived stronger autumn/winter marker at current low returns – and as ships naturally open in the Atlantic becomes absorbed logic dictate rates will have to come up. Position lists both East and West of Suez are relatively balanced, but more importantly the front end is controlled on fewer hands which narrows the scope. When you are at the bottom of the hill the only way is up.
Suezmax
If you quote a cargo in this market, you’re likely to receive 4, 5, possibly 6, 7 offers. That goes for nearly every region. Owners therefore have little else other than their own TCEs to use as the reason for resistance. The ships which have missed cargoes off their dates are left with a decision to sit and wait for the winds of change or fix at a number which involves a fair amount of waiting, which in turn will yield little returns. When we say little, we’re talking in the teens for TCE equiv. Therefore, the tonnage list is slowly squeezing rates down but it’s not going anywhere fast. Information in these markets is harder to come by because owners will do what they need to do to fix but there’s no point in talking about it. In our opinion, the tonnage lists suggest there’s at least another 10 days before ships begin to thin out. That’s the earliest we can hope for change in a positive direction for rates.
Aframax
The lackluster market form in the North has continued into this week with activity limited and freight rates steady at WS 120 for X-Nsea. USG and Mediterranean markets have also softened which has made ballasting out of the area less attractive, leaving a good supply of tonnage for a relatively small amount of activity.
Some activity this week in the Mediterranean, but charterers keeping the pressure on rates. Lots of tonnage has been committed though ships are willing to fix down from the North and so attention turns to what’s left in the region. With mid-3rd decade being worked and end month stems around the corner the hope is that September stems bring renewed backing for the region. Suezmax tipped to progress also which should allow Aframaxes in the Mediterranean to work without the threat of Suezmax.
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Source: Fearnpulse
