In Hellenic Shipping News 28/06/2016
According to the shipbroker, “given that the week’s demand has absorbed more tonnage than earlier expected and with the remaining list of available units now largely devoid of disadvantaged units, sentiment remains strong and could lead to further rate gains during the upcoming week as charterers move further into the Middle East July program’s second decade. We note that with 51 July fixtures covered thus far, a further 21 are likely to remain uncovered through the end of the month’s second decade. Against this, there are 35 units available through the same space of time from which West Africa draws are likely to total six, implying a surplus of eight units. This represents a considerable reduction from the 14 surplus units expected at the conclusion of the month’s first decade and matches the average end‐month surplus observed over the past 18 months”, CR Weber concluded.
Increased tonnage availability is hurting tanker freight markets across the board it seems. A typical example of this has been witnessed in the USG MR product tanker market this week, where, despite increased chartering activity, rates remained firmly in negative territory, which according to shipbroker Charles R. Weber, can be attributed to a slow start and the sustained presence of high availability rates. According to CR Weber, “a total of 33 fixtures were reported, representing a 6% w/w gain. Of the week’s tally, five fixtures were for voyages to Europe (‐3 w/w), 21 were to points in Latin America and the Caribbean (‐1 w/w) and the remainder were yet to be determined. Despite a further normalizing of labor relations in France’s refining and port sectors, arbitrage opportunities failed to materialize with the resulting declining pace of trans‐Atlantic voyages against steadier demand in European markets ushering fresh downside for ex‐USG rates. The USG‐UKC route gave back nearly all of the prior week’s gains and concluded down by 17.5 points to ws62.5. That reality quickly trickled to intraregional rates and the USG‐POZOS route was off by $75k to $325k lump sum, accordingly”, said CR Weber.
The shipbroker added that “record‐high gasoline demand in the US last week failed to inspire much upside in the UKC market, where rates on the UKC‐USAC route lost 12.5 points to conclude at ws110. AIS data this week showed a small number of units reported as fixed to deliver gasoline cargoes to the US East Coast diverted to alternative destinations within the Americas. PADD 1 (East Coast) gasoline stocks stand 15% above year‐ago levels while the four‐week moving average of US gasoline demand is just 4% above year‐ago levels, complicating the ability for the US’ east coast to absorb gasoline from Europe. While presenting a near‐ term negative due to the fact that units diverted from the USAC to the CBS are more likely to contribute to USG availability than had they freed on the USAC, these diversions could signal a healthier USG market going forward. Rising PADD 1 gasoline imports had formed a large economic basis for sustained European refining runs despite the resulting glut of middle distillates. This closed a large part of the export market for US and Middle East diesel, creating tonnage surpluses in CPP tanker markets. If economic run reductions accompany complications in pushing gasoline into the US, product tanker demand should benefit overall while the USG market should benefit from a greater number of voyages away from the region to the UKC and elsewhere”, CR Weber said.
Meanwhile, in the VLCC segment, “the market commenced with an extending of last week’s rate losses as limited demand was met with an excessive number of available positions – many of which were commercially disadvantaged due to age, recent dry docking or their status as new‐buildings. At midweek, however, chartering demand surged substantially and, once the bulk of the disadvantaged units were fixed, owners of the remaining more competitive units succeeded in pushing rates higher. The Middle East and West Africa markets ultimately yielded a combined total of 48 fixtures for the week, a 153% w/w gain and the most in eight months. Voyages to points in the Far East led the demand gains as charterers worked stronger cargo requirements as regional refineries move past high Q2 maintenance programs. Meanwhile, demand in the West Africa market rose to its highest level since January as purchases of Angolan crude rose on an earlier widening discount of key grades to Brent. The surge was largely concentrated around mid/late‐week and after touching a low of ws36.25 for a voyage from the Middle East to Korea on an ex‐dry dock unit, the AG‐FEAST route rebounded and ws47 had been achieved for a voyage to China”, said CR Weber.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
