Tonnage oversupply and rising bunker costs are pressuring tanker earnings in spot trades, according to market participants, with MRs in the Atlantic basin performing relatively better than others.
The Baltic Exchange estimated the Atlantic MR basket rate at $7,384 per day on Friday, down from $8,427 on 29 January but higher than nearly all other benchmarks and weighted averages for tankers.
“The markets are so low that we see different sectors being the highest paying at different times,” Gibson Shipbrokers research head Richard Matthews said, adding that short-term tonnage imbalances can boost any trade occasionally.
“Structurally, product carriers are weak across the board, but we do expect to see pockets of demand emerging here and there,” he added.
The MR trade was supported by rising north-west European gasoline exports to the US Atlantic coast, even though fixing activity was cooling off in recent days, brokers said.
But the exchange said in its weekly note that its moment in the sun could be over soon, with an increasing number of vessels ballasting from the US to Europe.
For larger ships, LR2 earnings on the Middle East Gulf-Japan route shed another $2,716 to $42 per day on Friday, not far from the all-time low. LR2 improved from $1,927 to $2,866 per day.
Market mood for LRs have been bearish in general due to limited arbitrage flows from Europe to Asia, according to Platts.
Suezmaxes weaken
On the crude side, the recent suezmax rally appears to be fizzling out with average earnings down 55.2% over the past week to $4,479 per day on Friday.
Some brokers attributed the fall to a growing tonnage list in West Africa.
Average aframax earnings fell to -$2,829 per day from -$1,255 amid broad weakness in the same time span.
Clarksons Platou Securities assessed global average VLCC earnings at $4,100 per day on Friday, down 33.8% over the past week.
Offering comfort to shipowners, the investment bank said chartering activity could possibly accelerate ahead of the Chinese New Year holiday starting in one week’s time.
General woes
With higher bunker costs and continued destocking of oil inventories, many tanker players expect tanker earnings to stay low in the coming weeks.
Very low-sulphur fuel oil price reached about $488 per tonne in Singapore on Thursday, compared with $414 at the beginning of the year, data from Ship & Bunker showed.
“This is killing the market … Sadly owners are not able to hike freight rates in Worldscale terms,” said a pool manager.
Despite Opec+ hinting at more crude supply from April in a meeting earlier this month, the pace of recovery in oil and tanker demand is widely expected to be slow and uneven.
“We are not at the end of tunnel yet,” a broker said.
