Baltic Sea bookings slow as ships fixed for multiple laden trips.
CHARTERERS of aframax crude tankers in the Baltic Sea are maintaining low freight rates by employing vessels for more than one laden voyage.
By booking aframaxes with options to fix additional trips, less cargoes are available in the spot market, which dampens market sentiment and suppresses charter rates.
?There does seem to be a lot less going on at the moment. In the Baltic, a lot of charterers are fixing with the option to take a second voyage. Once they have completed one leg they get the chance to employ that ship again at an agreed rate, so they just roll these ships over to cover their stems,? said one London-based broker.
?That is why you do not see so much going on in the spot market. It has been going on for a while, but it seems to be happening more and more now. Charterers can protect themselves from prices going up and owners are willing to give these options because they want to stay employed with positive earnings.?
Spot charter rates for ice-class aframaxes on Baltic Sea to UK Continent voyages have stuck at around W107.5 for the last week, with time charter equivalent earnings hovering around $30,000 per day, according to Geneva-based Riverlake Shipping.
By comparison on the spot market, Total"s chartering arm, CSSA, was reported to have taken the 2006-built, 117,055 dwt Propontis at W107.5, to load a 100,000 tonne cargo from Primorsk on March 2, with discharge on the UK Continent.
The stagnant market was echoed in the North Sea where Worldscale rates hovered at W102.5, or around $19,000-$20,000 per day, Riverlake said.
?The North sea is still dire,? said another London broker. ?You would have thought that people would be back at their desks following International Petroleum week and the Chinese New Year holidays and it might be a bit busier, but it is not.?
Over in the Mediterranean, sentiment was even worse as the doom and gloom attitude continued.
Although charter rates again stuck at around W90-W95 for the second week in a row for cross-Mediterranean and Black Sea trips, time charter equivalent earnings have been on the slide.
Owners are achieving around $3,500-$5,000 per day for these shorthaul trips, with further deterioration if bunker prices continue to climb.
?Bunker prices have gone up on average by 6%-8% over the last week, obviously increasing the voyage costs significantly,? a Riverlake analyst said.
?Just in Marseilles alone, 380 CST was up in one week by 17.1%, with potential owner returns impacted by 48% in comparison with one week ago.?
Bunker prices per tonne on February 16 were $457 per tonne, but yesterday had risen to $535 per tonne, he said.
?Earnings have been further reduced but I do not think the charterers are going to be overly kind to the owners because they are still in the plus at the moment,? said one of the London brokers.
Another agreed: ?Unfortunately, the bunker price is going up, but the rates are not changing.
?Obviously owners are losing, but remember last year the market got down to the minus level, and this is still better than that ? at least it is something. It has kept at W92.5 and I personally do not see it going any lower.?
Although Hellenic had booked a Centrofin aframax at W90 for three laden trips from Libya to Greece in the first week of March, the ship was reported to be built in the early 1990s and the lower price reflected the older ship, the broker said.
Fixtures by OMV, CSSA and Repsol at W92.5 were more indicative of the market, for cargoes loading in Libya in late February for discharge in Italy and Spain.
The only possibility for a rates increase would come from strike action at French ports, which has so far only impacted the product tanker market, but if it continues an increase could hit crude oil discharging and keep vessels tied up and out of the spot market.