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TANKER MARKET REVIEW
WEEK
20
VLCC
The pace of fresh activity in the Middle East market
slowed significantly this week after charterers covered
remaining May requirements and made a slow progression
into the June program. By mid-week, the lull saw rates
pare some of the gains made last week when activity
reached a 6-month high, and downward pressure has
remained evident through the remainder of the week.
Though negative pressure quickly spread from the Middle
East through most load regions in the Atlantic Basin
(the Caribbean being the exception), rate losses for
voyages commencing in the Middle East were uneven.
Owners were initially more resistant to rate losses
for Eastbound voyages than they were for Westbound
voyages with the latter offering better onward trading
prospects than voyages to the East, which many expected
would see their units return more quickly into a Middle
East market mired in a seasonal Q3 rate lull.
The
supply/demand position was at slightly greater disparity
this week when compared with week-ago levels. Against
a projected 10 carryover units, with the May program
concluding with a tally of 122 cargoes and a small
number of previously "hidden" units appearing
on position lists the number of carryover units is
now pegged at 15. Despite this, we believe that the
pace of fresh activity was a greater factor in rate
progression this week and will likely remain so during
the week ahead. Accordingly, if the June program remains
as active as the last decade of the May program, a
faster pace can be expected, which should at least
stabilize rates during the upcoming week (and possibly
offer fresh gains from mid-week). Otherwise, a continuation
of this week's much slower pace will likely see VLCC
markets remain under negative pressure.
Middle
East
There were 16 fresh fixtures in the Middle East market
this week with 13 of these for voyages bound for points
in the East. Rates to the Far East averaged higher
this week on the back of last week's late rally and
a slower pace of correction this week; these routes
gained 4 points, w/w, to an average of ws39.4. The
present assessment is ws38.0. Corresponding TCEs averaged
~$19,425/day, representing a w/w gain of ~$7,358/day
while the present assessment offers ~$16,559/day.
Assessed rates to the USG via the Cape averaged ws22.9,
a 0.1 point decline from last week's observed average
of ws23. The route is presently assessed at ws22.5.
Triangulated Westbound trade earnings gained ~$642/day,
w/w, to an average of ~$22,249/day.
With
the May program having completed with 122 cargoes,
we count 15 carryover units into June dates. There
have been 10 June cargoes covered thus far, leaving
an estimated 31 cargoes uncovered through the first
decade of the month. Against this, some 52 units are
expected to be available through the same period of
time (including the carryover units). The number of
"hidden" units is now likely lower with
owners showing these positions to capture the relatively
higher returns the market is offering.
Atlantic
Basin
Though more active when compared with last week, the
Atlantic basin remained slow this week with just seven
fixtures reported. Three fixtures for voyages commencing
off of West Africa materialized this week; rates to
the Far East averaged ws37.25, representing a w/w
loss of 0.5 point. TCEs on the route averaged ~$14,955/day,
off ~$311/day, w/w. The Caribbean market remained
slow, with just one fixture concluded on a CBS-WCIND
voyage. Assessed rates on the CBS-SPORE route remained
unchanged at the $3.8m LS level as positions remain
tight off of normal dates.
Suezmax
The Atlantic Suezmax market was flat this week with
rates on the WAFR-USAC route unchanged at the ws55
level. Fixture activity posted a modest improvement
on last week with a total of 14 ex-WAFR fixtures reported
- though this level is nearly double the YTD weekly
average, an oversupply of vessels continues to weigh
on rate progression. Rates on the BSEA-MED route shed
6.5 points this week to conclude at ws60 on the back
of a wider supply/demand disparity there. With TCEs
on the BSEA-MED route now some $3,600/day below those
on the WAFR-USAC route, modest rate downside for the
latter could be reasonably anticipated during the
coming week.
Aframax
The Caribbean Aframax market remained at strength
this week on the back of modest weather related delays
on the USG, a more limited supply of tonnage and sustained
activity. Rates on the CBS-USG route gained 10 points
to conclude at ws115. Voyage returns gained to ~$22,100/day
- representing a very strong premium to European markets.
The
NSEA-UKC route was unchanged at ws80 while rates on
the MED-MED route shed 5 points to conclude at ws67.5
on the back of more sluggish activity levels, possibly
owing to earlier pipeline issues servicing Ceyhan
exports.
Panamax
The Caribbean Panamax market was under negative pressure
through much of the week though delays on the USG
prevented a further building up of available positions
toward the end of the week, likely limiting further
rate losses. The CBS-USG route shed 5 points to conclude
at ws115. With rates untested at this level and the
market remaining quiet, it is difficult to assess
how rates will progress at the start of the upcoming
week.
CPP
The USG MR market remained strong this week with the
USG-CONT route gaining a further 10 points to conclude
at ws95. Export levels have gained further on strong
PADD 3 (US Gulf Coast) refinery utilization rates
and sustained demand is expected through the upcoming
week which is likely to see rate gains extend.
The
Continent market was under strong negative pressure
as rising available positions against slower fresh
demand caused a much greater supply/demand imbalance.
Rates on the CONT-USAC route shed 26.5 points to conclude
at ws143.5. With round-voyage TCEs on the route now
~$15,400/day and triangulated CONT-USAC/USG-CONT voyages
offering ~$20,300/day, a much more decisive preference
for units coming free off of the USAC to ballast towards
the USG is expected, which may ultimately help to
stabilize European market rates while limiting the
extent of further ex-USG rate gains.
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