You heard the one about Scorpio Tankers booking an MR for $85,000 per day in the Atlantic Basin?
That’s old news now, as the New York-listed clean product goliath says it nearly doubled that heady rate on a fixture at the weekend.
Scorpio’s latest coup in a spate of US Gulf export cargoes came as it booked the 49,900-dwt STI Esles II (built 2018) for a whopping time charter equivalent rate of $166,000 per day from the gulf to the west coast of Ecuador, which typically would involve a transit of the Panama Canal.
As TradeWinds has reported, nearly 150 ships are waiting outside the Panama Canal as a rainfall crisis has led officials to ratchet down the number of vessels that can make it through the 100-year-old waterway.
This has led some owners in various tonnage categories, particularly VLGCs, to eschew the passage altogether and send their vessels for longer transits around the Cape of Good Hope.
TradeWinds understands that the $166,000 rate negotiated for the STI Esles, which is not fitted with an exhaust-gas scrubber, does not include any demurrage charges that might be incurred for additional voyage time.
While a direct impact on routes typically necessitating a canal transit might be expected, Scorpio continues to report that a rates surge in an otherwise tight market is happening even on voyages with discharge points in the Atlantic.
For example, Scorpio is also reporting it has fixed the 50,00-dwt PS Milano (built 2018) at a TCE rate of more than $123,000 per day for a voyage from the US Gulf to the east coast of Mexico. Terms were agreed earlier last week. The tanker also lacks a scrubber.
Scorpio president Robert Bugbee told TradeWinds that while such elevated fixtures do not reflect the base market for Atlantic Basin MRs, they do represent spikes that can occur with the market already tightly balanced and heading into winter.
He said the canal troubles clearly are directly impacting voyages with discharge points in the Pacific.
But there is a secondary impact as longer transit times either through or around the canal are effectively reducing available MR supply.
Bugbee said the market has now seen owners begin to ballast tonnage from Europe to the Atlantic Basin in an attempt to take advantage of stronger rates.
While there is a question of whether the additional tonnage might moderate the US Gulf market, he said there is further uncertainty about whether the European market may tighten as a result.
And this is happening at a time when Chinese officials have given the green light for increased export of CPP volumes from its producers.
Market bulls such as Bugbee see those factors and prospects for a cold winter as potentially providing an early Christmas.
Clarksons Securities’ assessment of average earnings for an MR tanker on Monday were at $41,600 per day, up 16.5% over a week and 72% in the span of a month.
