May 12, 2017
The following is an overview of tanker spot market activity for the week ending May 12, 2017
Activity in the Arabian Gulf fell off this week with around 17-18 vessels reported fixed or on subjects, while the monthly figure for May stands at about 123-124 ships. We estimate the TCE for TD3 followed by a Caribbean/Singapore voyage is down about $5,500/day to $32,500/day. TD3 was estimated steady at about US $21,000/day for modern tonnage, while disadvantaged tonnage was fixing at a discount. In the Atlantic Basin market, we counted around 3-4 ships reported fixed or on subjects out of West Africa for discharge in the Far East and India. Charterers in the Western hemisphere booked about six vessels, while one fixture was reported in the UKC and none in the Mediterranean. Rates fell to WS 57.5 for West Africa/East, a TCE of about US $21,000/day, while cargoes to India paid about 3-4 WS points higher. We continue to see owners ballasting to the West in order to avoid the crowded Arabian Gulf market.
Volume recovered somewhat in West Africa as 13 vessels were reported fixed or on subjects for the week. Unfortunately, the boost in inquiry was absorbed by ample tonnage and did not yield higher rates. For the majority of the week, the market settled comfortably at WS 72.5 for UKC-Med discharge while two fixtures managed WS 75. These levels generally represent a return to lows thus far in 2017. Two cargoes fixed for India discharge paid $1.8 million and $1.91 million, while a voyage booked to the Far East achieved WS 85.
Freight rates for cargoes loading in the Black Sea for UKC-Med discharge traded generally flat week-on-week fixing in the WS 85-90 range. Voyages to the West took a big hit as rates fell from the mid WS 60s of last week to WS 57.5 for a stem out of Algeria bound for the US Gulf. A voyage to the Far East fixed at $2.7 million basis Korea-Japan, reflecting general weakness in the market.
The Caribbean market was poised to experience a downward correction to the start week based on the number of ships available on the position list. The East Coast Mexico list was surprisingly balanced and worldscale 130 and worldscale 120 were done before the demise of the Caribs, which eventually saw WS 110 and WS 102.5 booked.
Cross-Med fixing levels eased slightly from WS 110 to WS 105, directionally flat heading into the weekend. There was no change in the North Sea this week; WS 100 was the conference rate. Similar story in the Baltic as rates remained stagnant at WS 67.5.
The Caribbean couldn’t be more redundant as upcoast rates continue to fix and fail at WS 115. US Gulf tonnage remains scarce and Mexico rates are at WS 122.5 level. All signs are pointing to a bleak summer.
There was a bit of fixing in the UKC-Med this past week, but the market still took a hit. The conference rate for traditional trans-Atlantic voyages has been set at WS 112.5 basis US Gulf discharge. The lack of Caribs business has caused owners to consider a ballast, but natural tonnage has been around to cover any cargoes that surfaced. We expect the markets to remain flat and weak going forward.
The UKC market has traded steady for the better part of two weeks; however, this week we observed an uptick, likely due to increased demand for products into China and West Africa. These two trades drove the momentum and tightened the position list; however, rates along the UKC/USAC route only made slight gains to WS 125, about 5 WS points higher week-on-week.
The US Gulf experienced a much needed injection of cargoes this week, which helped support rates as the demand for tonnage was primarily for long haul voyages to Brazil. Stems on the USG/East Coast South America route firmed 25 WS points week-on-week and closed at WS 175. Similarly, the USG/UKC voyage was pegged at WS 105, up 25 WS points from last week.