The Baltic Dirty Tanker Index (BDTI) has surged to the highest level in four months as a broad surge in VLCC rates combined with more modest rebounds in aframax and suezmax markets.
The index rose to 1,554 points on Friday, up from 1,475 logged a week earlier and from the low of 1,083 reached in May, after the indicator lost some of the gains made in the wake of Russia’s invasion of Ukraine.
The latest reading for the BDTI, which weighs spot market strength across more than a dozen benchmark crude tanker routes, marked the highest level seen by the index since 20 April. It’s also more than double the level seen a year ago.
Key to the gains over the past week was a VLCC spot market surge that touched all key markets for the large crude tankers.
As TradeWinds reported earlier Friday, routes to China from the Middle East and the Atlantic basin saw significant gains as state-run refiners shifted away from Russian Urals-grade crude.
That fuelled a jump in average time-charter equivalent (TCE) rates that reached a two-year high of just under $23,700 per day on Thursday, before slipping back to about $22,300 per day at the close of the week.
But Friday’s figure marked a one-week gain of a whopping 656%, according to Baltic Exchange data.
That represents a dramatic turnaround for the sector, which only recently rose enough to show positive TCE rates on the Baltic data after first falling into loss-making territory in January 2021.
“Increased Atlantic activity leading to improving rates meant the Middle East Gulf market had to compete,” the Baltic Exchange said in a weekly report.
Deals show broad rises
Fixtures that emerged Friday showed the breadth of the rate gains during the week.
In the Atlantic, trading giant Trafigura grabbed the Petrobras-operated, 307,000-dwt CS Hunan Venture (built 2021) for a journey from Brazil to China at WorldScale 80.6, according to data from Tankers International.
While that was lower than a mid-week fixture on the same route at WS 81.25, the TCE rate of $71,000 per day was up from just $50,000 per day for a similar voyage on Tuesday, with both charters enjoying a scrubber premium.
On the US Gulf Coast, Exxonmobil chartered out the 300,000-dwt C Earnest (built 2022) to Mercuria at a lump-sum rate of $7.7m for a trip to Singapore, according to Tankers International.
The $70,600 per day earned by the scrubber-fitted vessel compares to just $64,700 per day earned a week earlier for a US-to-Asia fixture.
And on the benchmark Middle East-to-China trade, two scrubber-fitted VLCCs scored spot charters at WS 80, representing TCE rates of between $55,000 to 64,000 per day, Tankers International data showed.
A week earlier, a modern, scrubber-fitted tanker fetched a WS 64 charter worth just $28,200 per day.
“A phenomenal week for VLCCs,” said analysts at Clarksons Platou Securities on Friday, pointing to the piling in of cargoes in the US Gulf of Mexico and the Middle East.
But average spot market earnings for other key crude tanker classes also closed the week on the up.
While suezmax tanker TCE rates dipped late in the week, they ended Friday at nearly $49,800 per day. That marks a 9% gain over the seven-day period.
The week saw the end of a decline in rates for lifting Mediterranean-bound cargoes in the Black Sea decline and finally move upward, Baltic Exchange analysts said in a weekly report.
TCE rates for journeys from West Africa to Europe also surged in the first half of the week, before settling at just over $35,000 per day on Friday, up from about $29,000 a week earlier.
The sector was slowing down later in the week.
“There have been a few ships going on subs under the radar. However. this has not been enough to move rates, which remain flat as we head into the weekend,” said Howe Robinson, a London-based shipbroker.
Aframax rates also mounted some recovery, with the Baltic’s average of TCE earnings ending Friday at $54,300 per day, an improvement from $52,600 a week earlier.
The exchange’s analysts said the gains were made in the Mediterranean, which saw some lost ground recovered. Rates in the Atlantic also jumped.
