An increase in the number of spot vessels available for trading coupled with fewer long-haul voyages is putting freight rates under pressure in the Asian Aframax market.
An increase in the number of spot vessels available for trading coupled with fewer long-haul voyages is putting freight rates under pressure in the Asian Aframax market, shipping sources said Wednesday."There are many owners who are trading their vessels in the spot market," a Japanese broker said. This trend is being noticed more now because many people who took Aframax tankers on time charter, or T/C, last year, when the rates were in the region of $25,000-$30,000/day for a one year T/C, are now trading these vessels in the spot market because of lower demand for dirty products.
While Aframaxes on the Persian Gulf-East route are currently trading at w80, the Indonesia-Japan, South Korea voyages are attracting w75. Owners operating their vessels on the Indonesia-Japan, South Korea route are seeing $16,170/day and on the Persian Gulf-East $18,083/day. Since the beginning of the year, the Aframaxes have seen sub-w100 rates out of the Persian Gulf and Indonesia. Meanwhile, the owners of very large crude carriers, or VLCCs, have been earning close to $33,000/day on the Persian Gulf-East route. A fall in the number of long-haul voyages on the Aframax vessels in Asia, too, is impacting the freight rates for these vessels. "We need more long-hauls like the Persian Gulf-East voyages," the broker said, adding that there were not many cargo requirements in the market. "There is not a lot of cargo out there to be honest. They [the rates] could go down further," an Aframax shipowner said. "A lot of new buildings [Aframaxes] are coming into the market. I had a better feeling last week, but it is not good now," he added.
With close to 120 new Aframaxes expected to enter the market this year, some owners have expressed concern about a build-up of excess tonnage in the market. "The new-buildings [vessels] have affected the market because the scrapping of [older] vessels is not happening much," another Aframax shipowner said. "The new-buildings [vessels] are coming in and the old tonnage still exists," he added.