Freight rates for Black Sea-Mediterranean dirty Handysize vessels — the most widely used class to carry fuel oil and feedstocks in the European basin — have started to fall after hitting multi-month highs, due to greater tonnage availability in the Black Sea, sources said.
The rate was assessed Wednesday at $10.87/mt, down 57 cents from $11.44/mt Tuesday, after hitting a multi-month high October 4 of $12.58/mt, S&P Global Platts data showed.
“The rates were a bit inflated last week,” said a shipbroker. “So as soon as we had a few quiet days, they went down.” However, the spot market saw a few more cargoes surfacing by the middle of the week and a good number of vessels were reported on subjects. This may be an indication of the freight stabilizing for now, shipping sources said.
“I think the [Mediterranean freight] will come off, and the cross UKC is stronger,” a fuel oil trader said.
The Mediterranean fuel oil market has, meanwhile, become more balanced due to the rise in Handysize cargoes from the Black Sea, but an active Suezmax arbitrage east to Singapore could begin to dent stocks as Suezmax cargoes sail directly from the Black Sea to Singapore. This takes these cargoes away from the demand centre in the West Mediterranean, sources said.
The feedstocks market has also been hit by the decrease in Black Sea-Med freight rates as vacuum gasoil, a fuel oil feedstock, is exported through two main regions, the Baltic Sea and the Black Sea, although occasional cargoes can come from elsewhere.
Another factor affecting the market in the past day or so was “the bad weather going away,” a feedstocks trader said Wednesday. “And more vessels are now available as most of them were stuck in poor weather conditions.”
A few of the vessels cleared to complete their voyages were heard to be carrying high sulfur vacuum gasoil into the Med, sources said.
“This should help ease VGO prices,” the feedstocks trader added.
Traders loading vacuum gasoil cargoes from the Black Sea would incur lower delivery costs as a result of the reduced Black Sea-Med CIF/FOB spread, last assessed at $1.80/b, down from $2.05/b the first week of October.
Source: PlattsPrevious Next
Huge Opportunities For Investment in Maritime Sector: Nitin Gadkari
India Tanker Shipping & Trade Summit 2019