Norden has reportedly chartered out two MR product tankers for up to two years at strong rates, riding a spike in spot earnings and optimistic longer-term prospects.
The Danish shipowner fixed the 49,999-dwt Nord Magic and Nord Minute (both built 2009) to Clearlake Shipping at $14,950 per day for 12 months, brokers said. The deals are said to include an option to extend by another year at $18,750 per day.
The tankers are capable of carrying petroleum and chemical products.
Norden and Gunvor, the parent of Clearlake, declined to comment on the deals.
Beating expectations
The two vessels, operated by Norient Product Pool, have outperformed expectations. Maritime Strategies International estimates the ships' one-year rates at $13,200 per day in 2019 and $14,800 per day in 2020.
Among other reported one-year fixtures, Koch Industries has chartered the 50,300-dwt Alpine Legend (built 2010) from Sea World Management at $13,900 per day.
And Clearlake has chartered the ice-class, 52,600-dwt Verige (built 2010) from Uljanik Plovidba at $14,250 per day for 12 months. Both deals show strong market sentiment.
Clarksons assessed the prevalent one-year rate for MRs at $14,375 per day as of 29 March, the highest since July 2016.
Strong front-haul trade
According to Braemar ACM, one-year MR charter rates have been rising on the back of strong front-haul trade in the Atlantic basin, favouring owners who can deliver their vessels in the west-of-Suez region.
Spot earnings for the northwest Europe-US east coast MR trade had spiked above $20,000 per day at the end of March, supported by a strong US gasoline market with refinery maintenance and stocking ahead of the summer driving season.
US gasoline stocks fell to 239 million barrels as of 22 March, the lowest this year, figures from the Energy Information Administration showed.
Some areas will be long on compliant fuels, while others will be short. Many ports will need to import compliant fuels and there will be some stockpiling in advance of the deadline
Poten & Partners
Low refinery utilisation, flooding in the US Midwest, and the traffic disruptions at Houston Ship Channel have all supported the US gasoline market, providing incentives for arbitrage flows from Europe, according to Gibson Shipbrokers.
Firm US gasoline demand
“Further price support has been found from the switch to more expensive summer grades, whilst gasoline demand in the US is looking stronger than anticipated, underpinning firm buying activity in a tighter market,” Gibson said in a note.
For the longer term, many market players expect the IMO 2020 rules to trigger more cross-regional distillates trades and floating storage demand, offering more support for product tankers.
“Some areas will be long on compliant fuels, while others will be short. Many ports will need to import compliant fuels and there will be some stockpiling in advance of the deadline,” Poten & Partners said.
“Several trading companies and even some shipowners have indicated that they will use tankers to store compliant fuels ahead of the IMO deadline. Some will do so to take advantage of an expected price spike, while others want to ensure that they have enough supply.”
“We expect that the combination of these factors will lead to significant additional demand for product tankers (both for trading and floating storage)."
