The LR2 (Long Range 2) tanker market in the Middle East Gulf (MEG) indeed saw its resilience tested and ultimately yielded to downward pressure this week.
VLCC
The tanker market continued to soften this week, though there are signs that the rate of decline is decelerating, potentially indicating that a floor for rates is nearing.
Middle East Gulf (MEG) to China (TD3C):
- The rate for the 270,000 metric ton (mt) Middle East Gulf to China trip (TD3C) eased by 1 Worldscale (WS) point to WS43.6.
- This corresponds to a round-trip Time Charter Equivalent (TCE) of $22,764 per day.
- Note: TCE is a key metric in shipping that represents the average daily revenue performance of a vessel, calculated by subtracting voyage expenses (like fuel and port costs) from voyage revenues and dividing by the round-trip duration in days.
Atlantic Market:
- West Africa/China (TD15): The rate for the 260,000 mt West Africa/China route (TD15) slipped by approximately 1.5 points to WS47.06. This yielded a round voyage TCE of $27,252 per day.
- US Gulf to China (TD22): In the US Gulf region, the rate for the TD22 route (270,000 mt US Gulf to China) fell by $207,500 to $5,947,500 on a lump-sum basis. This translates to a daily round-trip TCE of $25,271.
Suezmax
Suezmax tanker owners experienced a significant decline in rates this week, taking the brunt of the market’s softening trend. This downturn was observed across several key routes.
- Nigeria/UK Continent (TD20): The rate for the 130,000 mt voyage from Nigeria to the UK Continent (TD20) plummeted by 14 points to WS74.72. This translates to a daily round-trip Time Charter Equivalent (TCE) of $26,929.
- Guyana to UK Continent (TD27): The TD27 route, for 130,000 mt from Guyana to the UK Continent, saw a fall of almost 10 points to WS76. This yielded a daily round-trip TCE of approximately $27,300 based on discharge in Rotterdam.
- CPC/Augusta (TD6): The TD6 route, carrying 135,000 mt from CPC (Caspian Pipeline Consortium) to Augusta, lost 5 points to just below WS95. This gave a daily TCE of around $31,250. While still relatively higher, it reflects the broader market weakness.
- Middle East Gulf to Mediterranean (TD23): In the Middle East, the rate for the TD23 route (140,000 mt Middle East Gulf to the Mediterranean via the Suez Canal) eased slightly to the WS81-82 level.
The widespread declines across these routes indicate a challenging week for Suezmax owners, with diminishing profitability as reflected in the lower TCE figures. This aligns with broader market observations of increased tonnage supply in various regions and a general weakening of sentiment.
Aframax
The softening trend observed in the broader tanker market has also impacted the Aframax segment, particularly across the Atlantic, while the North Sea route remained stable.
North Sea Market:
- For the 80,000 mt Cross-UK Continent route (TD7), the rate remained flat at WS122.5.
- This corresponds to a daily round-trip TCE of $35,650, based on a voyage from Hound Point to Wilhelmshaven.
Mediterranean Market:
- The rate for the 80,000 mt Cross-Mediterranean route (TD19) slipped by 4 points to WS128.78.
- Based on a Ceyhan to Lavera voyage, this shows a daily round-trip TCE of a little over $28,500.
Transatlantic Market (Downward Spiral Continues): The Atlantic market experienced a sharp decline in rates for Aframax vessels:
- The rate for the 70,000 mt East Coast Mexico/US Gulf route (TD26) collapsed by 26 points to the WS141 mark. This translates into a daily round-trip TCE of $28,200.
- Similarly, the 70,000 mt Covenas/US Gulf route (TD9) also fell by 26 points to the WS137 mark. This resulted in a daily round-trip TCE of $26,650.
- The trans-Atlantic route of 70,000 mt US Gulf/UK Continent (TD25) saw a hard fall, losing almost 30 points week-on-week to a fraction above WS138. This gives a round-trip TCE of a little over $31,200 per day, based on a Houston to Rotterdam voyage.
The significant drops in the Atlantic routes highlight a challenging environment for Aframax owners operating in that basin, indicating an imbalance between available tonnage and cargo demand.
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Source: Baltic Exchange
