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With tonnage increasing east of Suez, rates for Aframaxes were
pushed lower on Easter Monday, as charterers had more choices
available. A ship employed in TD8, carrying 80,000T of fuel oil
from Middle East Gulf to East Asia, earns marginally more than USD
10,000 per day, with the rate approaching WS100. Demand remains
rather weak, with some of the charterers co-loading their cargoes
on Suezmaxes. As some facilities within the Middle Eastern Gulf are
set to increase production of LSFO later this year to meet bunker
demand for marine fuels compliant with the IMO 2020 requirements,
we expect larger ships to become more popular for the carriage of
fuel oil in this region.
Meanwhile, rates on the route from the Red Sea to China declined
as well, having been pushed closer to WS110. Recent fixtures agreed
already refer to loadings in the third decade of May (around 21
May). The downwards trend was followed in Southeast Asia as well,
with companies such as Shell fixing more loadings for the next
couple of weeks at lower rates. A similar story to tell for the US
Gulf, where the increasing availability of Aframaxes caused earlier
rate gains to disappear quickly. BP has fixed shipments to Europe,
with loadings around 25 April, at WS67.5.
Aframaxes in Northern Europe moved up marginally last week
driven by the substantial charterer requirements on routes out of
the region. But this doesn't mean that this month's average will
surpass levels seen in March. Ships carrying crude from Primorsk or
Ust-Luga to the UK Continent were paid around WS77.5 in mid-April,
for loading in early May. The rather steady levels of activity in
the Baltic and North Sea supported the sentiment, but only for as
long as the market remained busy. Since the tonnage list was more
than healthy to satisfy running requirements, rates were not
allowed to move upwards. The situation for Aframaxes in the Med and
the Black Sea has been worse, as charterers pushed rates even lower
due to the long tonnage list. Ballasters from the Black Sea would
have targeted loadings from Libya, but owners seem to have been
reluctant in parallel to the concern around the current political
situation and the instability over the next couple of weeks.
Overall, owners have been struggling this month, as oversupply
remains the major headache for them. Any improvement driven by the
increasing number of transatlantic cargoes does not last for long,
with the sense of vulnerability further strengthening. For now,
even moderate Aframax fixing does not prove enough to stimulate the
market.
Posted 29 April 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
