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West African loadings seem to have increased by 4.6%
month-on-month in May, but this wasn't enough to support Suezmax
earnings in the region, as owners had to face the increasing
competition from larger tankers. VLCCs managed to load almost a
fifth more since April, but with total volumes still remaining
below levels achieved in March. This meant less cargo for Suezmaxes
to load, with a sharp decline to report since April, which reached
8.6% month-on-month.
As recent data by IHS Markit and Market
Intelligence Network suggests, the number of ballast vessels across
the Atlantic has been increasing since mid-May. This added
significantly more pressure to the spot market, as the ballast
fleet of both VLCCs and Suezmaxes has been increased by 4.8% on
average week-on-week since mid-May. The main driver behind this
trend has been the rather strong loading activity for VLCCs in
early May, both in West Africa and the Caribs (including US Gulf),
which attracted a lot more ballasters to the Atlantic, since
performance in the Middle East Gulf has been rather disappointing
since mid-May.
Focusing on flows from West Africa, activity in the freight
market suggests there will shortly be an increase to observe,
primarily in volumes heading to China, with India's market share
slowing down. Petroineos has been recently fixing for the second
half of June. Other charterers, including CNOOC and Day Harvest,
have been active as well, having fixed VLCCs and Suezmaxes for
eastbound shipments. Rates for VLCCs loading in West Africa have
been under pressure, having fallen below USD 2.7 million from USD
three million a couple of weeks ago, while Suezmaxes would
currently get paid around USD 1.8 million. The VLCC "CHRYSSI" was
fixed to load from Akpo and Egina for IOC, with laycan in the third
decade of June, at a rate of just USD 2.65 million. Total has been
looking to fix a Suezmax heading to the Far East by the end of this
week. Some charterers have already been fixing VLCCs for WAF
loadings in late June as well, just like Unipec that recently fixed
the "TAI HUNG SAN" and the "LONG HU SAN" to pick up cargo around
27-30 June. The limited enquiry for West Africa to the UK
continent/ Mediterranean pushed the Suezmax rates further down,
with charterers like Repsol quickly taking advantage of the
situation by securing the "MIKAELA P" to load from West Africa to
Spain, around 15 June.
The US Gulf hasn't been absorbing a lot from the spot market
around West Africa either, with the only exception being the
"NORDIC SPACE" that will load in Nigeria to US Gulf or East Coast
for Petroineos, around 17 June. Meanwhile, owners of Suezmaxes have
been struggling with overcapacity in the European market as well,
with some vessels picking up smaller cargoes, that Aframaxes would
have typically targeted. After discharging 1.1 million barrels in
Spain in late May, the "FRONT CLASSIC" was fixed to carry only
80,000t for Petrogal from Sidi Kerir to Leixoes, but still allowing
the owner to generate reasonable earnings, which are estimated to
have surpassed USD 530,000. This is a trend expected to last as
cargoes across the Mediterranean currently tend to be smaller than
100,000t, best sized for Aframaxes. However, more Suezmaxes have
been targeting the market, since rates still stand above USD
6.5/t.
Activity is still focusing on flows to Asia, both Far East and
India, while there are still some requests for cross-Mediterranean
volumes. Litasco stepped in, once the Novorossiysk-Mediterranean
spot rate for Suezmaxes further declined and fixed the "BARBAROSA",
with the loading expected around 11 June. The same company fixed
the "RIO GRANDE" at USD 2.25 million for Novorossiysk to WC India,
with laycan around 15 June. Vitol took the "AEGEAN STAR" from
Mellitah to the Med, with loading between 7 and 9 June.
Another Suezmax, the "DONAT" was fixed by Total, to pick up
cargo from CPC to WC India, after discharging in Portugal in late
May. The rate agreed surpassed USD 2,250,000.
Posted 04 June 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
