Product tanker owners are enjoying a mini rally in markets east of the Suez Canal.
Rates are being supported by tighter tonnage supply in the Middle East and increased exports of refined products from east Asia, market source said.
Clarksons Platou Securities estimated spot LR1 earnings on the route between the Middle East Gulf and Japan at $13,700 per day on Thursday, up 39.1% over the past week. LR2 earnings rose 31.6% to $11,800 per day.
“Brokers said they see a very tight list of available LR ships, and a lot of cargoes, thus rates are going up,” the investment banking arm of shipbroking giant Clarksons said.
“They believed there will be a rush for mid-December cargoes going East.”
The strength followed a jump in MR earnings in the gulf last week, triggered by a potential shortage of products in South Africa due to the refinery explosion in Durban.
“We had been expecting to see the LRs rise out of the Middle East Gulf following the rise in MRs last week,” Gibson Shipbrokers’ head of research Richard Matthews said.
“Quite simply, better dollar-per-tonne costs could be achieved on LRs, so it was no surprise to see charterers optimising where they could.”
Also, the Baltic Exchange assessed the MR Pacific Basket rate at $13,037 per day on Thursday, up by 32.1% since the end of November and close to its highest in six months.
Brokers observed a busy fixing activity for exports from north-east Asia, where refiners tend to ramp up overseas sales by the end of the year.
Kpler data shows Taiwan is set to export 157,000 barrels per day of products this month, the highest since April.
The Chinese government last month reportedly issued a new batch of fuel export quota of 3m tonnes, which needs to be used by the end of December.
“I suspect there will be a bit of an end of year rush, but finding demand to export has not been easy,” Matthews said.
“The gasoil arbitrage window to the West is closed, which in a way could support regional MR trade as the economics of shipping it out on newbuild crude carriers are questionable.”
But the recent bullish factors are seen as temporary in nature, and some are worried that rising bunker costs and low oil demand would put a lid on vessel earnings.
“The rates are just off the floor a nice bit,” a commercial manager said. “Bunker prices are up though. That’s also a big consideration.”
