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February 19, 2018

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Dirty Tankers West of Suez Commentary

New York (Platts)--07Dec17/0745 pm EST/ 0045 GMT

VLCC rates for West African cargoes stumbled further Thursday amid the weakening market in the Middle East and the ever-growing pool of tonnage for both of these major loading regions. The WAF-Far East route, basis 260,000 mt softened Worldscale 1.5 to w56, with potential for even lower numbers before the week was done, sources said. A Chinese relet was said to be on subjects for a Unipec 260,000 mt cargo from West Africa to China at w53.5 for early January laycan. "It is not surprising that this WAF market is weakening as it is mostly following Arabian Gulf rates," said a shipbroker. "And there for a cargo in the normal fixing window, you can collect 11 offers, which clearly indicates how bad things are for owners." According to shipping sources, time-charter equivalent returns on front-haul voyages to the East have now reached $11,000-$13,000/d levels, which barely covers operating costs for a standard VLCC tanker. With the main front-haul market now quickly approaching the bottom, other routes were feeling mounting pressure as well. The WAF-East Coast India and WAF-West Coast India runs, basis 260,000 mt, were both assessed down $700,000 at lump sums of $2.35 million and $2.15 million, respectively. The Aragona was booked for IOC 260,000 mt WAF-EC India stem with January 7 laycan at $2.35 million. As industry participants said, voyages to India were sometimes perceived by shipowners as a good way to kill time before rates on longer-haul voyages recover, which gives charterers the clout to ask for discounts. "Considering how terrible their earnings are, shipowners might start holding off from fixing now," a shipbroker said. The Suezmax market fared a bit better in West Africa and rates to UK Continent, basis 135,000 mt, remained stable at w90. Shipowners were starting to dig their heels in and resist attempts to break below the w90 barrier. Petroineos was said to be working a 130,000 mt cargo from West Africa-UKC/Mediterranean for December 24 laycan and attempting to fix at w87.5 with no takers for now. In the Black Sea, a tightening tonnage list allowed shipowners to gain momentum and push for higher numbers. The Black Sea-Med route, basis 135,000 mt, rose w5 to w100. The Ce Hamilton was heard on subjects to Trafigura for December 27 loading at that rate. The Vinga was said to be on subjects to Transway with a 140,000 mt cargo with December 26 laycan at w97.5. Similar sentiment was reflected in the Handysize market in the Baltic region, where Baltic to UK Continent voyages for 30,000 mt fuel oil stems were assessed up w5 at w190. Clearlake was heard putting a vessel on subjects at that rate for a Baltic-UKC run with December 28 loading.


Trends

Cross Med AFRA 80kt


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