Tanker market shows mixed signs this week
By totalco.com, from hellenicshippingnews.com
Published: 2011.05.31
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While VLCC owners cheered on this week, others saw earnings drop, but all in all it seems that the tanker market is looking in better shape. First of all, VLCC owners finally broke the psychological barrier of of WS50 for voyages from the Middle East

Gulf to Eastern discharge destinations and daily earnings have doubled in a week; at WS52.5 daily returns are about US$9,000 (depending on fast moving bunker prices), still below operating costs (about US$10/11,000 per day), but at least there has been a substantial improvement. In a weekly report, BRS (Barry Rogliano Salles) said that Western destination options stayed stable at WS36/37 for the US Gulf. May closed with 121 fixtures (spot) concluded, and June is already at 50, a good figure, but not enough to boost rates due to the endemic oversupply of tonnage. Even if the week ended on a quieter mode, the positive trend, though on a slow path, should carry into next week. In the Atlantic basin, some last minute cancellations led to some exceptional spot rates although they were not truly reflective of the market, which is not being helped by the weakening Suezmax market. WS55 is the conference rate for both Western or Eastern discharge” said in the report.
Meanwhile, the Suezmax market logically dropped this week. Despite decent activity, a 10 point drop from West Africa was quickly registered, with rates bottoming at WS72.5 for the Transatlantic route. Due to rising bunker prices, it is doubtful that the market will drop further but logic is not always respected… Currently, a Wafr/Usac run basis 130,000t at WS72.5 gives a return of about US$6,500 /day. The Black Sea and Med markets were more volatile than Wafr. Here as well, the market is weak and probably close to the bottom. Tonnage availability is more than sufficient and the market should stay stable for some time, with possible spikes due to the persistent political instability still arising around the Med area. Daily returns for a round voyage Black Sea/Med basis 135,000t at WS80 are about US$ 8,500.
In the Aframax market, due to stable enquiry in the first half of the week rates remained mostly unchanged at around 80,000t x WS110 ex Black Sea, and about same for cross Med (about US$18,000 per day). Syrian cargoes still pay a premium (about WS125) but the general outlook for the traditionally slower second decade of the month is softer and charterers are likely to be able to push rates down. Business in the Middle East continues as two separate markets, with a tight short haul/intra-region market where tonnage is tight and interest limited. On the other hand, longhaul rates remain stable and fairly low at WS115 ex MEG as ships ballasting from the east continue to compete.
Finally, “it was a very tense week in the Middle East clean markets. Last week closed with predictions of a slowdown, and early this week the market seemed to confirm those feelings. However late May/early June dates saw numerous vessels going on subs. At this stage rates seem stable across all the routes. A high influx of requirements for vessels could tip the balance either way. The feeling remains, however, that there will be a slowdown. Cross-MEG cargoes fixed at US$275,000 lumpsum end week, while 35,000t cpp MEG/East Africa, with no fixtures this week, was estimated at WS295 levels. 35,000t naphtha MEG/Japan is fixing at WS150. The LR market seems to be losing pace as well and LR2s basis 75,000t naphtha MEG/Japan are settling around WS120 levels while LR1s are fixing at WS140 levels for 55,000t on the same route.
Demand in the Med market came to a halt this week with extremely limited activity. Cargoes were very rare both from the Med and the Black Sea. Tonnage availability has steadily increased, including a large amount of MRs on top of the typical Handysize units. By the end of the week the count was close to 30 prompt ships throughout the zone.
As expected, freight rates crashed down to the WS185 level for cross-Med and sub WS200 for Black Sea. For the fourth week in a row, the NWE markets softened. Due to a good supply of tonnage since the start of the week, the rates fell further down despite good levels of activity. The transatlantic market was traded at WS145 basis 37,000t, a 20 point drop from last week while a couple of Cont/Waf cargoes ended at WS150 basis 33,000t. The cross UK/Cont Handy market saw rates drop to WS165 basis 30,000t ex Baltic and flexi tonnage was reported fixed as low as WS190 basis 22,000t” concluded the Paris-based shipbroker.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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