Rates for medium-range (MR) tankers out of the US Gulf fell to a two-month low amid growing ship supply and potentially less cargoes going into Mexico. But rates from United Kingdom and Europe remain strong as refineries there pump out more petrol.
The Baltic Exchange's daily assessment for Atlantic Basin MR earnings slid 12% for the week to end up at just over $15,800 per day.
MR rates are coming off a 10-month high of $21,600 per day seen in late December. Last month saw a surge of cargoes as US gasoline exports hit an all-time high of over 28 million barrels per day. For all of December. Atlantic Basin MR rates averaged $14,400 per day.
Most of those cargoes went to Mexico which saw its US imports hit 561,000 barrels per day last month, up 27% from November, according to Clipper Data.
But rates are softening as more ships come into the US Gulf. MJLF analyst Court Smith expects 30 open ships to come into the US Gulf in the coming week, joining some 72 already in the region not on subjects.
"Prompt tonnage in the US Gulf remains, and ample ships are available within a seven day window and beyond," Smith says the MJLF Weekly Tanker Scorecard.
Whether Mexico's gasoline demand remains strong is unclear as the country's populace reacts negatively to a 20% increase in fuel prices since 1 January. Many cities have seen riots and protests break out due to the price hike, which is part of a larger effort at energy sector reform.
The high ship supply forced down the backhaul TC14 assessment to $3,200 per day, from a December high of $10,400 per day.
In addition to US Gulf cargoes, MRs are seeing good demand to ship out barrels from UK refineries. The TC2 front-haul saw assessed earnings at over $15,100 per day, the highest since early November. The health of the front-haul rates should help mitigate further weakness for MRs in the Atlantic Basin, Smith says.
"TC2 trips mean more for tonne-mile demand," Smith said. "So in the long run, better for all."
