A vast oversupply of suezmax tonnage has held charter rates down, with the mid-sized crude tankers expected to stay in their rut despite a rally for VLCCs.
The time charter equivalent (TCE) rate for a suezmax tanker as assessed by the Baltic Exchange fell to $3,781 per day on Thursday, down from $5,961 per day on Monday and continuing a slide that began in early August when rates were $12,556 per day.
"Too many ships," a shipbroking source told TradeWinds. "It's not busy enough."
"Normally, they would move hand in hand, led by the VLCCs. This week, the supply fundamentals were weak for suezmaxes."
The source said there were just four suezmax cargoes in the east and four in the west, with tonnage saturating the market and holding down rates.
Cargoes have also reportedly dried up in the VLCC market, as well, with only two available worldwide on Thursday.
The weakness has caused rates to cool off since catapulting from $3,195 per day to $15,096 per day last Friday.
Thursday, the Baltic Exchange said a TCE for a VLCC had fallen to $10.672.
"To say it is quiet is an understatement," the source said. "That market has got no strength in it."
The source's comments were echoed by Howe Robinson in its daily reports this week.
All week, the broker described a slow market where charterers had their pick of ships.
"Rates come off in the [Middle East Gulf] and Western African markets today under the crippling weight of long tonnage lists across the Suezmax market," the report read.
"With little outstanding heading into Friday, it’s difficult to see how there will be any shift in momentum."
News that Opec and its allies were meeting to review compliance with the supply cuts announced earlier this year suggests suezmaxes could remain in the doldrums, the shipbroking source said.
"People are going to be producing less until December," he said. "I can't really see that we're going to have a great Q4."
But he did not expect rates to get worse.
"This is the lowest point of the year," he said.
