Oct. 7, 2016
The following is an overview of tanker spot market activity for the week ending October 7, 2016
On the back of steady volume out of the AG, rates on the AG/East trade rose from the WS 40s to the mid-high WS 50s. AG/West was quiet and one vessel that was fixed at WS 27, ultimately failed. At current bunker levels, the TCE for a voyage AG/East is about US $43,000/day basis WS 57.5, while the TCE for a cargo AG/West followed by Caribbean/Singapore traded around US $35,000/day.
In the Atlantic Basin, activity slowed week-on-week, but owners remained positive with West Africa rates in the high WS 50’s. With Hurricane Matthew causing havoc in the Caribbean and a tight tonnage list, most owners in the area have refrained from working any cargoes. There’s the potential to see near US $4 million basis discharge Singapore when fixing resumes. Although the West saw lower demand this past week, position lists are still tight due to the active past two weeks. A stronger AG market gave ballasters the opportunity to ask for higher rates, despite weaker demand.
Freight rates in West Africa continued to decline, although at a slower pace than last week. Rates for UKC-Med discharge traded down 5 WS points into the low WS 80s, while voyages to the East fetched WS 82.5, a weaker rate than might have been expected.
Volume in the Black Sea/Mediterranean declined week-on-week and rates followed suit. Black Sea/UKC-Med fell 35 WS points to WS 85 on the back of thin volume. Voyages to the East were mixed with rates generally trading in the US $2.3-2.4 million range basis Singapore discharge. Talk of Libyan exports increasing has not reached the ears of charterers as the market remains devoid of such inquiry.
Up-coast volumes remained thin out of the Caribbean and East Coast Mexico, but the list is surprisingly balanced after two straight months of above average trans-Atlantic fixing. A rate of worldscale 80 was paid out of East Coast Mexico, up five worldscale points on the week. In the Black Sea/Med, a surplus of prompt tonnage dragged rates down to worldscale 80 for a preferred voyage on Monday when the benchmark cross-Med voyage was paying worldscale 85. By week’s end, worldscale 72.5 has been done, capping a 17.5 worldscale point decline with no rebound in sight.
It was dreadfully quiet in the Caribbean with very little reported activity. Fixtures seem to be hanging in the worldscale 80s for voyages loading in East Coast Mexico and the Caribbean. We foresee little change in the coming week with as surplus of tonnage in the region. The UKC/Med market made no headway and fixing was reported in the lower worldscale 80 levels. Owners will ballast from the Caribbean region in hopes of locking in a decent return for a longer voyage and create additional competition for natural tonnage.
The UKC market stalled this week in the wake of a long tonnage list. The market opened steady at WS 70, which carried into Thursday, and then rates found some support from increased Baltic loaders and pushed rates up to WS 75. On the other hand, the US Gulf market continued its downward spiral this week as rates fell back to yearly lows, even with Hurricane Matthew ripping through the Caribbean. The backhaul USG/UKC trade lost another 10 WS points week-on-week to settle at WS 50. The USG/Caribs trade followed suit and softened US $25,000 to US $250,000.