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June 20, 2018

Tankers

Markets

Clean Tankers Commentary

New York (Platts)--08Mar18/0745 pm EST/ 0045 GMT

The East of Suez Long Range tanker market was little changed Thursday, but some of the market participants cautioned that unless more cargoes come in, the LR1 rates will soften in the near term. "The market is on the brink of a downward trend on the LR1s," a chartering executive with a global commodities and refining company said. The position list is very long, the executive said. Among the fixtures heard, the Kings Road was placed on subjects by Shell at $1.3 million for March 16 jet fuel loading on the Kuwait-UKC route, sources said. There are just under a dozen LR1s available for loading in the Middle East in the next week and the number rises to around 50 for the next three weeks, according to the shipping industry estimates. The corresponding numbers for the LR2s is just one ship and two dozen, the estimates showed. The LR1 rates are likely to soften, a broker in Singapore said. There have been prolonged periods of time since last year when the earnings of LR owners have been less than $5,000/day on the benchmark Persian Gulf-Japan route, according to the estimates of brokers. However, they have currently improved and are closer to $12,000-$15,000/day, they said. The cost of moving 75,000 mt and 55,000 mt cargoes on the PG-Japan route are $20.97/mt and $20.75/mt, respectively, according to the S&P Global Platts data. The cost is $24.41/mt for MR tankers. In the MR market, the rates have firmed up in North Asia but earnings are better in the Persian Gulf, a source with an MR owner said. For voyages within the Persian Gulf, owners can earn upward of $20,000/day and for loadings in Iranian ports such as Lavan Island it is at $25,000-$30,000/day. In contrast, the earnings on the South Korea-Singapore route on MRs, the earnings are barely $12,000-$13,000/day, he said. Slowdown in the supply of incremental newbuilding MRs is helping in bringing about a healthier balance in supply and demand, from the point of view of owners, the source said. Jet fuel fixtures on the South Korea-USWC route have slowed down but it is offset by more voyages within North Asia and on the North Asia-Southeast Asia routes, another source with an MR owner said.


Trends

Arab Gulf-Japan 55kt


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