Aframax tanker rates remained depressed last week with levels still at “rock bottom” and little hope of improvement in the short-term, says a top broker.
“In both the Mediterranean and to the North, activity picked up at the beginning of the week as charterers sought to cover forward, taking advantage of the rates,” said Affinity (Shipping) in its weekly aframax report.
“Yet, owners offered little resistance, taking pretty much exactly what they were given and, as a result, TD17 and TD19 are at WS 55 and 73 respectively.”
Falling bunker prices have limited some of the damage, according to Affinity, but time charter equivalent (TCE) rates on both routes remaining in the “single digit” thousands.
“We don’t expect the markets to improve in the short-term as charterers continue to have a wealth of options when looking to cover their positions,” said Affinity.
“In the Mediterranean, just a handful of cargoes remain to be fixed, with a total of 54 available in all, which falls significantly below July’s 64.”
Affinity said there were 20+ vessels open in the Mediterranean, so the market’s current state needed little explanation.
We don’t expect the markets to improve in the short-term as charterers continue to have a wealth of options when looking to cover their positions
Affinity (Shipping)
“That production has resumed at Libya’s largest oilfield will come as little consolation for the market,” it added.
In the North, Affinity said matters are compounded by the news that Novorossiysk is suspending all loadings on account of a storm, with no clear indication as to when operations will resume.
“There are a few cargoes remaining to be covered for August loading dates, but should these delays be prolonged, these cargoes may be pushed into September,” it said.
Affinity said a higher number of re-lets has also played its part, further “flooding the market with tonnage”, which it said had “offset any positives to be taken from the slightly increased level of activity”.
Transatlantic aframax rates are said to be at their lowest in at least 14 years prompting a number of shipments to the US.
Affinity said a North Sea Kraken cargo is destined for the US Gulf as US refineries, which are said to prefer the heavier crudes produced in the likes of the North Sea, begin to take advantage of the improving arbitrage.
Last week, the spread between the North Sea Dated and WTI benchmarks narrowed to its smallest premium since July 2018, according to the broker.
The on-going exceptions of the Middle East and South East Asian aframax markets remain, but Affinity said there is “little to get excited about”.
“Rates in the Middle East have continued to be supported by the on-going tensions with TD8 hovering around the WS 104 level,” it added.
