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TANKER MARKET - WEEK 4
VLCC
The Middle East market was extremely quiet this week
as several eastern charterers were absent owing to
the New Year holiday week whilst many of the remaining
charterers stepped back from the market, possibly
in hopes that the resulting inactivity would drive
rates down. Though rates remained relatively stable
throughout much of the week (albeit with many key
routes largely untested), nearer to the close of week
the lull appeared to have taken its toll and rates
did indeed post small declines. The story was not
far different in the Atlantic basin, where ballasting
units from the East continued to hold the position
list sufficiently populated to allow for a slight
decline in rates in tandem with those observed in
the Middle East given the reduced opportunity cost
argument.
In
the Middle East market, there were just 8 fresh fixtures
reported this week. Of these, all but one were bound
for the East. Rates to the far east averaged ws62,
representing a nearly 6 points gain w/w-though this
is largely attributed to the rallying market late
last week and the delay before rates ultimately commenced
their decline late this week. Average TCEs in this
direction were ~$38,100/day. Rates to the West held
steady at the ws35.5 level throughout the week, with
a corresponding average TCE of ~$2,400/day on the
MEG-USG route. Triangulated westbound trade earnings
averaged ~$40,700/day.
To
date, some 60 February Middle East cargoes have been
covered, representing approximately half of the February
program. Through mid-month, 22 units are projected
to be available; although some of these will likely
bypass the Middle East in favor of the more attractive
returns in the Atlantic basin, supply remains abundant
which implies further easing of rates in the Middle
East. Increased activity by eastern charterers on
their return could provide sufficient activity to
cause rates to rebound before an eventual easing.
The
Atlantic basin presided over another busy week with
11 fixtures reported - though many of these were concluded
at the tail end of last week, and from early this
week a quieter period prevailed due to Eastern holiday.
As activity slowed and ballasting units vied for fewer
cargoes, the market experienced some easing of rates;
ws59 is the latest reported rate on the WAFR-China
run, which is a 6-points drop from a week ago. Trans-Atlantic
interest remained prohibitive due to the more economical
nature of the Suezmax class at present rates; this
has been the case for some time with nearly a month
having passed with a VLCC fixture on this route. Caribbean-Singapore
rates held steady around the $5.3m level as USG positions
continued to tighten. With eastern charterers back
next week it is expected that activity in the Atlantic
basin will pickup-particularly given the recent surge
in interest for crude sourced from locations alternate
to the Middle East. Accordingly, rates should hold
steady.
Suezmax
The Atlantic Suezmax market experienced a small measure
of further downward pressure on rates this week as
trans-Atlantic activity was limited and overall pressure
on tonnage declined in tandem to the normalization
of transit times in the BSEA/MED market. Rates on
the WAFR-USAC benchmark route eased about 1.5 points
this week to the ws80 level. At the close of the week,
however, a rebound in activity has made owners more
bullish and although no observable rise in rates has
been recorded, a continuation of activity during the
week ahead could see rates post modest gains.
Aframax
The Caribbean Aframax market commenced the week with
negative pressure, declining from ws125 to ws120 before
a pickup in interest in the Aframax class coupled
with the working of some cargoes off prompt dates
retested the market higher around ws130. At the end
of the week, with at least four cargoes outstanding
pressure on tonnage remains. The market concluded
around the ws137.5 level and may commence next week
around the ws140 level.
Panamax
Although activity remained generally limited, rates
on the CBS-USG benchmark route posted a 5-point gain
to ws110 at midweek on retesting and remained at this
level through the remainder of the week. In part,
oversupply issues have been offset by the continued
strength in rates in the European market, where TCE
returns are ~$5,000/day above those in the Caribbean.
This has prompted some units to ballast to Europe
whilst allowing owners with units remaining in the
Caribbean to cite the ability to ballast as a means
preventing rate losses.
CPP
MR rates extended last week's losses across all Western
markets this week as uncertain arbitrage windows saw
the activity lull remained whilst available tonnage
continued to mount.
In
the Caribbean, rates on the CBS-USAC benchmark route
declined 10 points to conclude at ws130. Given the
extent of losses in this market since early January
and with a number of units having ballasted towards
the better returns offered in the European market,
there is some reason to believe that more resistance
next week may stem further losses. Backhaul USG rates
declined into the mid-ws60s, but with owners expecting
that the European markets will soon follow those in
the Caribbean on rising tonnage, there is little incentive
now to trade cargoes towards Europe and accordingly
rates on the route have likely reached a near-term
trough. Rates on the CONT-USAC route slipped to ws140
this week, but with a number of ballast units expected
to populate the list next week, these could decline
further into the ws130s.
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