Crude Oil
Middle East
VLCC rates suffered a gradual decline in the AG as the week wore on, with Charterers mainly keeping fresh enquiry off market and thus creating a softer sentiment amongst Owners as opportunities to fix were limited. The list remains balanced, so if enquiry does pick up, we could see an upturn next week. Today we are calling 270,000mt AG/China at ws 67 and 280,000mt AG/USG is now at ws 39 level.
The AG has firmed this week, with healthy level of enquiry and a tight list Owners will be looking to push above 140,000mt x ws 67.5 via the Cape. To head East the market is also pushing up and we estimate ws 130 to head East.
The East continues to firm on Afras this week with TD8 pushing to break 80,000mt x ws 200. The list remains absent of well approved tonnage in the AG and with Suezmaxes no longer coming to the rescue, Charterers are forced to reach ahead or try to clear some of the rustier units. With the Med also heating up, Owners are in a strong position to drive rates onwards and upwards. Sentiment is expected to remain firm in the near term.
West Africa
Owners experienced a positive start to the week, as enquiry picked up and tonnage remained tight, especially for earlier dates. However, rates started to come under pressure as a plethora of ships, being released in the USG, began to hit sentiment and Charterers feel confident they can regain the upper hand for last decade June enquiry. We estimate that the current rate for WAF/China should be around the ws 69 level.
Suezmax markets in West Africa pushed up early in the week but they do seem to be stalling with enquiry drying up towards the weekend. For TD20 today we estimate this at 130,000mt x ws 110.
Mediterranean
TD6 is firm, with a number of ships chopping and changing due to delays in Mediterranean ports, rates are approximately 135,000mt x ws 125. Rates to head East have firmed slightly but there are still ships putting their hand up to go that way. Rates are around $5.4M for Libya/Ningbo via the Cape.
In the Med, positive pressure continued for a second successive week, as with tonnage lists trimmed and activity in full flow, Owners found increasingly more support for higher freight levels. Furthermore, with fewer Suezmaxs in play to take out part cargo employment, ceiling caps which had placed a dampener on Owners spirits were now lifted. The end result has seen levels climb to just below mid ws 200’s for a benchmark Ceyhan/Augusta run, with shorter voyages peaking at ws 290. Looking ahead however, owners will have their work cut if they are to keep momentum rolling, as temporary drivers will soon cease and such stimulus isn’t likely to be long term. Furthermore, whilst this had been being seen in surrounding markets such as the US, rates have actually softened slightly. With this in mind, the inevitable tonnage replenishment will happen which includes units arriving from the US, this in turn would point towards the recent supply imbalance being addressed.
US Gulf/Latin America
A more challenging environment for owners in the USG as the recent upsurge in rates began to level off. Fresh enquiry remains limited and Charterers were able to secure tonnage at below last done, with more ships coming back into the market. Brazil exports had a steady week but it too began to see rates plummet downwards on the back of the downturn in adjacent zones, albeit at a slower pace . Today we expect a USG/China run will fix in the region of $9.35M, while we estimate a Brazil/China run is paying around the ws 67 level.
North Sea
Owners with units in the Continent must have been feeling some frustration this week as with a Med market in full flow, Positive volatility of any real note continues to elude this region. As such Owners have been keeping units ticking along at conference levels, but for the voyages offering a reposition to the Med or round trip Med/UKC run. For these voyages at least we have seen a more malleable trend with some mutual cooperation being struck outside of normal market parameters.
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Source: Gibson
