Tanker fixing activity slowed this week, leading to a dip in rates across the board that are expected to be temporary.
The Baltic Dirty Tanker Index slipped 16 points to 1,461, while the Baltic Clean Tanker Index dipped 12 points to 1,150, with few gains to be had on individual routes.
“VLCC rates dipped this week, in the most part due to the Golden Week and associated holidays in the Far East, which has kept the market very quiet,” the Baltic Exchange said in its weekly note.
Its analysts said rates on the Middle East Gulf to China route dropped nearly $7,000 to $40,542 per day with South Korea and Chinese players away, though the market was showing signs of life on Friday.
Overall, the Baltic's VLCC time charter equivalent assessment fell $6,444 to $22,895 per day over the week and lost $1,150 on Friday.
The suezmax TCE fell $4,546 to $51,576 per day and the aframax TCE dropped $2,414 to $48,050 per day.
“In the Middle East Gulf this week most LR runs have seen more declines from inactivity,” the Baltic said in its report, noting the same phenomenon was holding down rates west of the Suez Canal.
Rates for an LR2 on the route from the Middle East Gulf to Japan fell $7,528 to $25,217 per day during the week, continuing a descent that began in mid-September when rates were as high as $67,599 per day.
Earnings for an LR1 on the same route lost $6,418, dipping to $17,672 per day, following a year-to-date high of $59,154 per day earned on 12 September.
The same ship sailing from the Mediterranean to the Far East lost $7,566 to fall to $10,436 per day.
MRs on the US Gulf Coast fared even worse, with rates there halved this week. Ships heading to Europe fell by $21,133 to $10,746 per day and those to Brazil fell $21,328 to $28,861 per day.
Bright spots
Despite the red ink, Gibson Shipbrokers said there were signs in many markets that things could turn around quickly.
For VLCCs, the broker said owners were able to recoup some losses, despite cargoes being “drip-fed” into the market.
The broker said that by the end of the week there were still cargoes outstanding.
“We can expect levels to continue to press onwards and upwards,” Gibson said.
The firm said the market in West Africa appears to have found a bottom and that a shorter tonnage list would begin pushing rates upward, while sentiment for crude tankers in the Mediterranean remains firm.
LRs east of the Suez Canal followed a similar pattern to VLCCs, with some improvement seen mid-week.
“Volume will be needed next week to continue this bounce, but signs are that it should do,” Gibson said.
The UK broker noted that noting LR2s saw more cargoes available as the week went on.
