Black Sea suezmax rates rise on booming aframax market
But oversupply of tonnage in West Africa prevents charter prices from climbing as high
The two major Atlantic suezmax spot markets have become disconnected for the first time this year as activity booms in the Black Sea but an oversupply of tonnage weighs down on West Africa rates.
Normally falling and rising in parallel, the benchmark route rates that start from these two major crude oil loading areas are in opposite situations at the moment.
Black Sea to Mediterranean spot rates have boomed on the back of a rocketing aframax market, with a handful of smaller 80,000 tonne cargoes being parcelled up on suezmaxes last week as the economics of chartering tankers played into their favour.
This gave owners in the area much-needed confidence to push prices up, with the rise in rates likely to continue into April, London brokers said.
?At the moment there"s a shift of tonnage. There"s lots of suezmax vessels coming open in the US Gulf but not so many in the UK Continent and Mediterranean area,? said one broker. ?That explains why there"s such a differential between rates at the moment.?
In the Black Sea, Eni was reported by Greece"s Optima Shipbroking to have hired the 2007-built, 146,356 dwt Ice Traveller to load a cargo on April 3 at W177.5, with discharge in the Mediterranean.
This followed comments from brokers that French oil major Total had paid W120 for an Arcadia suezmax tanker to load a 130,000 tonne crude cargo in Libya on March 30, with a discharge in Northern Europe.
These fixtures helped push the Baltic Exchange TD6 route, from Novorossiysk to Augusta, up 8 Worldscale points last week to W119 on Friday, with time charter equivalent earnings of $33,855 per day, up $5,000.
?There were a number of occasions last year where the aframaxes rallied up to such a level that it meant the suezmaxes could then gatecrash that market,? said one London broker. ?But this is the first time this year that scenario has happened.?
Suezmax owners in the Black Sea and Mediterranean have not had to fend off competition from other ships ballasting into the area either.
Any ships waiting in the overtonnaged West Africa market for cargoes are not likely to ballast up to the Mediterranean, and ships ballasting back across the Atlantic from the US are not going to head for the Mediterranean to pick up work as the shorthaul voyages there are not economically viable for them.
?A number of UK Cont and Mediterranean transatlantic trips are being done by vessels ballasting into the area, leaving the guys naturally positioned in the Med area able to capitalise on cross-Med market.,? said one broker.
As well as cargoes from Arzew, Algeria, set for discharge in the US Gulf or US Atlantic coast, a number of Tallinn cargoes from the North Sea were booked onto suezmaxes last week.
Clearlake Shipping, the chartering arm of energy trading giant Gunvor, was understood to have booked the 2007-built, 162,258 dwt Windsor Knutsen at an unreported rate for an April 5 loading on this route, while another charterer fixed a suezmax on April 3 from Tallin to the US at W115.
?That last vessel ballasted from the US Atlantic coast, and it even though it"s a longer trip its better than them going to West Africa along with all the other tonnage around,? said the broker.
Rates on the Baltic Exchange"s TD5 West Africa to US route, shipping 130,000 tonnes from Bonny terminal in Nigeria, fell last week to W92 or $20,426 per day, down from W102 or $25,500 a week before.
?It"s a bit messy out there at the moment, on Thursday the rate band ranged between W85-W100, with all those prices paid within a few hours of each other,? the broker said. ?Charterers held back too long trying to create softening but owners are wise to these tricks now, that"s why they"re showing resistance.?