Crude Oil Trade: Aframax rates drop further
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.
- Recovery started for Japanese crude oil imports
- Norwegian crude oil exports set to decline in September
- Charting the COVID pandemic effects on international trade
- COVID-19 impact on trade in the United States of America
- Massive jump in Indian crude oil imports after June’s record lowest levels
- The worst quarter in trade on record, signs of a weak recovery in China and a positive trend in PMI new export orders readouts for all top economies
- OPEC seaborne shipments edged up to 19.1 million b/d in July, while Russia has a tight grip on cuts
- Can the sub-Panamax sector recover as strongly as Capesizes?