Analysts have pointed to encouraging fundamentals for product tankers in the current tanker boom, particularly if owners opt to convert some ships for crude trades.

Clarksons Platou said rates for clean vessels had taken a "big step up" this week, with LR2s assessed at $56,000 per day, a rise of 43%.

"The market is tightening across the board, and we expect rates to continue to improve throughout the week," analysts Frode Morkedal, Erik Hovi and Henriette Vevstad said.

Their data shows LR2 bids have been made at WS300 on the Arabian Gulf/Japan route, translating into $78,000/day, a level not seen since 2008.

MR earnings were assessed at $19,500/day and are still lagging, but should be lifted by the overall strong market, the analysts added.

Deutsche Bank analyst Amit Mehrotra said the clean fleet had built significant momentum in October behind the Cosco sanctions, improved tanker sentiment and positive seasonality.

He added: "Seasonal headwinds are beginning to subside with the heaviest portion of fall [autumn] refinery maintenance now in the rear-view."

Conversions coming?

"The LR segment is the biggest beneficiary of the Cosco sanctions as the vessels primarily transport refined products from the Middle East to the Far East."

And he added: "Interestingly, we are hearing rumbling of some owners converting LRs to the dirty side (aframax) to capitalise on the surging crude tanker market, a potential positive for product tanker owners ahead of the IMO catalyst."

Significant LR tightening eventually trickles into the MR market as operators are forced to split cargoes, DB said.

Product tanker rates are "easily" at year-highs currently, Mehrotra said.

"We expect product tanker spot markets will continue to tighten into year-end as global refinery throughput outpaces typical seasonality and IMO tailwinds begin to hit the market in November," he added.

VLCCs soften

The red-hot VLCC sector calmed a little on Monday, but the fall was partially offset by a further decline in bunker costs, with average earnings assessed at $280,000 per day.

"The scramble for tonnage has started to ease, with fixing activity meaningfully down since last week, as charterers think twice before fixing at current rate levels," Clarksons Platou said.

The FFA market is pricing fourth-quarter VLCC contracts at WS120, implying rates above $100,000 per day for the remainder of the year.