Despite an overarching negative sentiment in the market, the LR2 (Long Range 2) tanker segment in the Middle East Gulf (MEG) demonstrated a surprising degree of resilience this past week.
VLCC
The VLCC (Very Large Crude Carrier) market experienced a further plunge this week, though there are signs that a floor might have been reached, with rates in the Middle East Gulf and West Africa potentially beginning a rebound.
Key VLCC Route Performance:
- Middle East Gulf to China (TD3C): The rate for the 270,000 mt trip saw a significant drop of almost 7 points, settling at WS44.35. This corresponds to a round-trip Time Charter Equivalent (TCE) of $24,332 per day.
- West Africa to China (TD15): In the Atlantic market, the rate for the 260,000 mt voyage is now 4 points lower than the previous week, assessed at WS48.63. This yields a round voyage TCE of $29,631 per day.
- US Gulf to China (TD22): The US Gulf region witnessed notable activity. Equinor had a cargo on Wednesday, with Exxon and Shell (using relets) competing for the business. Exxon secured the fixture, taking the first counter at $6,400,000. However, sentiment has softened since then, and the TD22 route for 270,000 mt from the US Gulf to China was last assessed on Thursday at $6,182,500. This represents a substantial drop of over $1 million for the week and translates to a daily round-trip TCE of $27,810.
While the market generally softened this week, the reported rebound in the Middle East Gulf and West Africa could indicate a potential stabilization after the recent downturn.
Suezmax
Suezmax owners in the Atlantic region have successfully pushed rates upward, indicating a stronger market in that basin compared to the Middle East.
Here’s a breakdown of the Suezmax market:
Atlantic Market Gains:
- Nigeria/UK Continent (TD20): The rate for the 130,000 mt voyage has improved by nearly 9 points to WS89.17. This translates to a healthy daily round-trip Time Charter Equivalent (TCE) of $36,509.
- Guyana to UK Continent (TD27): Similarly, the rate for the 130,000 mt trip from Guyana is up almost 9 points for the week, reaching WS86.94. This gives a daily round-trip TCE of $37,793, based on discharge in Rotterdam.
- CPC/Augusta (TD6): The 135,000 mt CPC/Augusta route is 5 points firmer at a fraction below WS100, yielding a daily TCE of $36,350.
Middle East Market Stability:
- Middle East Gulf to Mediterranean (TD23): In contrast to the Atlantic, the rate for the 140,000 mt Middle East Gulf to the Mediterranean route (via the Suez Canal) remained relatively stable, hovering around the WS83 level.
The data suggests a stronger demand or tighter tonnage availability in the Atlantic Suezmax market, allowing owners to command higher rates. The Middle East market, while steady, has not seen the same upward momentum.
Aframax
The Aframax tanker market is exhibiting varied performance across different regions, with some stability in the North Sea, a recovery in the Mediterranean, and a volatile “rollercoaster” in the Atlantic.
North Sea Market:
- The rate for the 80,000 mt Cross-UK Continent route (TD7) remained steady at WS122.5. This translates to a daily round-trip Time Charter Equivalent (TCE) of approximately $36,371 for a voyage from Hound Point to Wilhelmshaven.
Mediterranean Market:
- The rate for the 80,000 mt Cross-Mediterranean route (TD19) showed a notable recovery, gaining 15 points to settle around the WS135 mark. For a voyage from Ceyhan to Lavera, this yields a daily round-trip TCE of a little over $32,600.
Atlantic Market Volatility:
- The Atlantic market has seen significant fluctuations, with rates on a “rollercoaster ride” for regional voyages.
- For the 70,000 mt East Coast Mexico/US Gulf route (TD26), the market initially surged over 40 points but has since fallen back by about 4 points from its peak, now assessed at WS171.11. This shows a daily round-trip TCE of approximately $42,200.
- The rate for the 70,000 mt Covenas/US Gulf route (TD9) mirrored the movements of TD26 and is currently assessed at WS167.19, providing a daily round-trip TCE of around $38,700.
- The trans-Atlantic route of 70,000 mt US Gulf/UK Continent (TD25) also experienced a peak, rising 32 points, before losing 8 points on Thursday. It is now assessed at WS173.33, yielding a round-trip TCE of $44,646 per day for a voyage basis Houston to Rotterdam.
The Atlantic basin, particularly for shorter and trans-Atlantic Aframax routes, is displaying high volatility, suggesting dynamic supply-demand balances and quick shifts in market sentiment.
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Source: Baltic Exchange
