Mediterranean aframax rates decline halted.
AFRAMAX charterers have prevented cross-Mediterranean rates from breaking below the psychological W100 barrier in a bid to protect their own earnings.
To the relief of owners who have witnessed time charter equivalent earnings fall by more than two thirds since the start of 2010, charterers have shown no desire to push prices further down in the last week.
At W100, earnings equate to around $9,000 per day ? just above operating costs.
Brokers say that many charterers are unwilling to let market levels drop below this as they do not want income on their own relet ships to suffer from a low spot market.
?They have their own ships and if they keep pushing the market down, then obviously when they want to relet their own vessels on spot they"re going to have to accept the same market levels,? said one London broker.
It followed news yesterday that weaker margins had seen profits fall at BP Shipping, which brokers said was contributed to by revenue generated from reletting its owned fleet in the spot market when it was not needed for BP cargoes.
?Of course they want to prevent prices from dropping too much. Eni has the same thing ? it has ships coming out of its programme all the time. So they"ve got to play the game,? said one broker.
With ?hardly anything? happening in the Mediterranean spot market many had feared sub-operating cost earnings, but the market has balanced itself out at W100 or around $7,000 per day for the past week, according to Baltic Exchange data.
Although brokers reported rumours of a ship fixed at W95, it was likely to be for an older vessel on a voyage that required fewer port approvals, meaning owners should not be too worried yet, they said.
Oil giant BP was understood to have booked the 2007-built, 105,747 dwt Seasenator at W100 to load an 80,000-tonne cargo at Ceyhan on February 7, with discharge in the Mediterranean, Greek broker Optima reported.
Socar had fixed a Centrofin aframax, also at W100, for the same trip loading on February 8.
These were two of a small handful of ships fixed so far this week, with no sign of a pick-up in activity.
?It"s got to be one of the quietest periods we"ve had for a very long time. I can"t remember the last time so little has been going on,? said one London broker.
?The market is dead. Charterers are giving the cargoes privately and they"re just picking off ships. I"d love to know how many ships will offer if ERG comes in the market. There are a lot of ships out there.?
Instead of fixing around two to three weeks before loading dates, as is traditional with a strong market, charterers are booking ships just one week in advance as they have no reason to fix further ahead.
?They just don"t need to. When you"ve got all these prompt ships around you can pick and choose and wait until the last minute,? he said.
The same situation was occurring in other aframax Atlantic markets, with cross-North Sea and Baltic Sea rates plummeting as ships piled into the market.
Cross-North Sea rates have fallen so quickly in the past week that time charter equivalent earnings have halved to around $20,000 per day.
There was ?not much to say? other than a lack of cargoes into the market combined with increasing ship availability had led to North Sea and Baltic Sea rates dropping, a Riverlake Shipping analyst said.
The Baltic Sea-to-UK Continent rate was dragged down by Litasco, which reportedly booked the 2004-built, 114,500 dwt Pantelis at W105, to load a 100,000 tonne cargo between February 9-11, according to Optima.
This caused the Baltic Exchange TD17 route, from Primorsk to Wilhelmshaven, to slide yesterday to W103 or $21,319 per day.
Meanwhile TD7 Sullom Voe-to-Wilhelmshaven rates dropped to W115 or $16,953 per day, after rumours that an aframax had been fixed at W112.5.