Following nearly a month of rate softness, crude and product tanker earnings are riding high again on seasonal oil demand and IMO 2020.
Spot earnings of VLCCs on the Middle East-China route reached $91,737 per day on the Baltic Exchange as of Thursday afternoon, up from the day-ago level of $78,814 per day and week-ago level of $54,698 per day.
According to Tankers International data, the 300,000-dwt Front Prince (built 2002) was provisionally booked by SK Energy for loading crude from Middle East Gulf on 12 December for a voyage charter to South Korea at Worldscale 110.
Similar deals were done at about WS 75 a week ago.
“Fairly healthy activity across most regions amid traditional winter season inefficiencies have helped tighten tonnage lists,” Clarksons Platou Securities said.
“Brokers said they expected rates would move up further in the short term, likely breaching $100,000-per-day soon.”
According to market participants, the tonnage list has tightened with healthy charter activity over the past week, giving shipowners the upper hand.
Based on Tankers International’s estimates, 165 VLCCs have been fixed to lift from the Middle East Gulf this month and 36 VLCCs from West Africa, up from the normal levels of 157 VLCCs for Middle East and 32 VLCCs for West Africa.
Also, 36 VLCCs have been fixed to lift from the US Gulf, the Caribbean or the east coast of south America in December.
Smaller segments are also enjoying surging earnings amid firm supply-demand fundamentals.
Average aframax earnings amounted to $51,945 per day as of Thursday afternoon, up from the week-ago level of $41,339, while suezmax earnings rose to $53,420 per day from $46,539.
Broad bullishness
Having hit multi-year highs in early October, crude and product tanker earnings had been subdued until last week.
On a quarterly basis, most market players still expect that the fourth quarter would turn out to be one of the strongest in recent memory, though.
On the product tanker side, LR2 earnings on the Middle East Japan route rose to $33,792 per day as of Thursday afternoon, representing a week-on-week gain of 76.6%. LR1 earnings increased to $24,559 per day from $18,632.
As for MRs, the Atlantic basket rate rose to $33,792 per day from the week-ago level of $19,133, while the Pacific basket firmed up to $23,574 per day from $19,537.
Aside from seasonal heating demand in the northern hemisphere, longhaul distillates shipping demand is expected to stay strong for some months with the IMO 2020 fuel switch, many industry players have predicted.
Data from Kpler showed distillates exports from the East-of-Suez region to the West-of-Suez reached 786,000 tonnes this week, up by 358,000 tonnes from last week’s level.
“Limited demand growth in Asia combined with refining ramp-up is freeing up more product to support compliant fuel supplies for IMO 2020,” Maritime Strategies International said. “This should be positive for product exports.”
