In Hellenic Shipping News 07/03/2016
Middle East
Suezmax
Aframax
PanamaxFinally, “the Caribbean Aframax market was quieter this week but observed further modest rate upside following the earlier exodus of tonnage to alternative markets and last week’s stronger demand levels. The CBS‐USG route added a further 5 points to conclude at an assessed ws130. Limited impetus for rate movements in either direction should see rates hover in the ws125 to ws130 range through the start of the upcoming week”, CR Weber concluded.
Tanker rates for VLCC vessels could find more support moving forward according to the latest shipbroker report from Charles R. Weber. The shipbroker noted that “a total of 81 cargoes in the Middle East’s March program have been covered to‐date, including 72 through the first two decades, leaving an estimate four further cargoes for loading up to 20 March. Up to the same date, there are 12 units showing certain availability – and we expect that two of these will be drawn to the West Africa market. Thus, an implied 6 surplus units at 20 March is expected, which represents more than half the number of surplus units previously noted through 15 March – and considerably more in line with a level which supports improved rates. Thus, a stronger rate environment could prevail during the upcoming week as charterers cover the remaining second‐decade stems. ”
CR Weber went on to mention that “thereafter, position lists show few units coming free during the final decade of the March program, though much uncertainty prevails over the extent of “hidden” tonnage (which is difficult to accurately estimate from AIS data given the uncertain intentions of charterer relet units, COA contracts, etc.). Expected hidden positions are low and available tonnage should tighten further (possibly as a symptom of earlier weather and ullage delays in Asia), strengthening rate gains should accompany a progression into late‐March dates; however,if commercial managers are concealing a large number of positions to support rates after last week’s tonnage buildup and rate losses, the sudden appearance of a large volume of units as rates start posting gains could ultimate limit the extent of further upside”, the shipbroker concluded.
In the Middle East market, CR Weber said that “rates to the Far East were assessed at an average of ws50.2, off 8.9 points from last week’s average. Corresponding TCEs dropped 20% to an average of ~$40,511/day. Rates to the USG via the Cape were assessed at an average of ws29, off 5.2 points w/w. Triangulated Westbound trade earnings were down 14% w/w to an average of ~$60,431/day”.
Similarly, “the West Africa market saw rates drop in tandem with the Middle East market and the WAFR‐FEAST route was assessed at an average of ws56.5, representing a weekly loss of 12 points. Corresponding TCEs fell 22% to an average of ~$44,890/day. In the Caribbean market, strong rate losses prevailed as supply/demand fundamentals disjointed further on a lull in regional fixtures and amid a softer overall VLCC earnings environment. Compounding the situation, at least three units ballasted from Asia to service internal cargoes, further reducing forward demand. The CBS‐SPORE route was assessed at an average of $5.33m, off $55k w/w, while the present assessment of $4.85m represents a 6‐month low.”
Meanwhile, “the West Africa Suezmax market was busier this week on the back of an earlier slump in regional VLCC demand which left more cargoes available for the smaller class. A total of 14 fixtures were reported, representing a w/w gain of 56%. The stronger demand, for which inquiries heaviest at the start of the week, stemmed negative pressure on rates. The WAFR‐UKC route eased 2.5 points at the start of the week from last week’s closing assessment and remained unchanged thereafter at the ws67.5 level.
Despite ongoing issues with the Forcados pipeline and export terminal, which has likely shut in 250,000 b/d, Suezmaxes have recently benefitted from stronger demand due to a decline VLCC utilization for March cargoes. Total March VLCC cargoes were at a 14‐month low during March and dates being worked have now moved on to April. This saw Suezmax demand during the first decade of the March program rise 35% m/m – and the second decade has already risen to a m/m increase of 27% ‐‐ with further cargoes to be worked. As these are covered and charterers move more aggressively into the final decade of the month’s program, a steady and elevated demand profile for Suezmaxes should prove supportive of rates and offer fresh upside as the supply/demand positioning improves in tandem. Further forward, however, a Saudi OSP hike for eastbound April cargoes could push Asian demand back into the West Africa market and ultimately halt any upward Suezmax impetus on a progression into April dates with more cargoes likely to be covered on VLCCs”, said CR Weber.
“Demand in the Caribbean Aframax market was unchanged at a moderate level this week with 15 fresh fixtures reported. Meanwhile, the four‐week moving average of regional fixtures dropped to a six‐week low of 16. Regional rates corrected quickly at the start of the week with the CBS‐USG route failing to observe upside from a ws145 fixture at the close of last week as it ultimately failed and a replacement fixture earlier this week at the same level proving unrepeatable. Meanwhile, the impact of some units speculatively ballasting into the region from softer markets elsewhere (particularly the Mediterranean, where earnings are $11,912/day, or 40%, below the class’ worldwide weighted earnings average) was offset by ongoing delay issues in the USG area. As a result, rates leveled off at the ws137.5 level. Further availability builds over the weekend should start to exert observable negative pressure on rates during the start of the upcoming week – and any reducing of delays will likely see an extending of any losses thereafter”, the shipbroker noted.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
