- WAF Suezmax freight rates approach Q3 lows due to reduced demand and tonnage oversupply.
- Bahri week in Dubai has contributed to limited market activity.
- End-of-year recovery is anticipated, despite the current market downturn.
Freight rates in the West African (WAF) Suezmax segment have dropped close to their Q3 lows. This decline is attributed to low cargo demand, excess tonnage, and minimal activity as many market players attend Bahri week in Dubai, reports SP Global.
Recent Freight Rate Assessments
On November 12, Platts assessed the 130,000 mt WAF-UK/Continent route at w80, factoring in EU Emissions Trading Scheme costs.
This is a notable decline from w105 on October 7. The near yearly low of w72.5 was recorded on September 26.
Brokers on Market Slowdown During Bahri Week
A Europe-based shipbroker noted, “It’s been very quiet from West Africa, and it will be a quiet week with all the parties going on.”
A London-based Suezmax broker added that many fixtures are being handled privately. It means that they won’t impact the wider market due to Bahri week festivities.
Pressure from Other Softening Markets
A second London-based Suezmax broker observed that WAF rates face pressure from weakness in adjacent markets, particularly in the US Gulf transatlantic sector.
He stated, “The market is [bad] everywhere — the US Gulf is also going to dump aggressively, as will the AG [Persian Gulf].”
Impact of US Gulf Market Conditions
Freight rates for the 145,000 mt US Gulf Coast-UKC route were assessed at w57.5 on November 12. It matches the 10-month low previously hit on August 12.
The lengthening tonnage lists in the US Gulf, paired with a recent influx of Aframax ballasters, is likely to keep both the Suezmax and Aframax markets suppressed.
Outlook: Possible Year-End Recovery Expected
Despite current bearish trends, a third London-based Suezmax broker remains hopeful, stating,
“I still think we’ll see rates rise towards the end of Q4 and start of Q1.” He anticipates that weather-related delays might stimulate some recovery. He does not expect a major rally as seen last year.
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Source: SP Global
