In International Shipping News 21/09/2016
Americas Medium Range clean tanker freight rates on the US Gulf Coast-Caribbean run skyrocketed 120% from lump sum $250,000 to $550,000 since last Monday, as USGC refiners moved mainly gasoline volumes to the Caribbean after a leak detected on Colonial’s Line 1 has disrupted the transport of gasoline from Pasadena, Texas, to Greensboro, North Carolina, since September 9.
To avoid product building in the Gulf Coast, demand increased to move to offsite storage locations in the USGC and the Bahamas as well as to mainly Caribbean destinations.
According to S&P Global Platts Medium Range tanker data, freight on the USGC-Caribbean run rose 120% from a lump sum $250,000, or $6.58/mt, to $550,000 lump sum, or $14.47/mt, from Monday to Monday.
“We are very bullish,” a shipowner said in view of a delayed restart of Line 1, and at the same time shippers are keeping a close watch on potential cuts in USGC refinery runs to alleviate ullage problems at water-in/water-out refinery terminals.
“We will also see refineries begin to cut back on runs due to containment issues. We shall see what the activity looks like for week 38,” a broker said. While gasoline demand into South America appeared limited in reaction to the first run-up of freight to both the region’s West and East coasts last week, Monday saw charterers placing vessels on subjects to Chile at freight 36% higher than a week ago at $1.225 million lump sum, or at $32.24/mt, while the USGC-Brazil run saw vessels placed on subjects at 30% higher rates as freight rose from $15.99/mt to $20.75/mt during the same period. Position lists rapidly tightened last week amid heavy fixing activity, as charterers initially were looking for waterborne alternatives to moving USGC gasoline on the Colonial Pipeline for loading by September 20-21.
As the natural fixing window has shifted forward to September 23-25 and later laycans, position lists look healthier. It really “depends [on] how many cargoes are in the market,” a broker said.
While cuts to refinery runs to alleviate containment issues might limit upward pressure on freight values, a restart of Line 1 this week will also provide a ceiling to the Americas freight market.
“The restart of Line 1 is still projected for this week,” a shipper update sent by Colonial Pipeline on Sunday afternoon said, and Colonial Pipeline spokesman Steve Baker said Monday that the pipeline operator is considering a temporary workaround of the damaged area of the pipe.
The restart plan requires director approval, a daylight restart, a review of conditions, documentation of completed mandated actions, hydrostatic, pressure testing, and an in-line inspection performed within 90 days of restarting the segment, among other requirements.
Source: Platts
