Freight rates for Medium Range tankers have plunged over the past week west of Suez after hitting their highest so far this year on refinery closures in the US Gulf caused by Hurricane Harvey as the tonnage list is set to fill up again.
US demand for gasoline imports remains high despite the restart of Texas refineries and the reopening of port infrastructure on the US Gulf Coast, as the trans-Atlantic route out of Europe continues to spur interest.
The UK Continent-US Atlantic coast route, basis 37,000 mt, peaked at w247.5 last week on the frenzy to supply the US and those markets normally supplied by the US Gulf, which had in one stroke lost about 18% of its refining capacity.
The high rates on the European side of the Atlantic lured many ship owners to send their vessels to Europe on ballast.
One broker said he had counted more than 30 vessels incoming the Amsterdam-Rotterdam-Antwerp area next week.
“Rates are definitely going to drop with the armada incoming, and owners have been trying to push for deals this week with little luck,” another broker said.
The UKC-TA route, basis 37,000 mt, was assessed down Worldscale 5 on the day at w145 on Wednesday, more than w100 below Friday’s rate.
The BW Merlin was heard on subjects to Statoil to carry a 37,000 mt cargo from Mongstad in Norway to the US Atlantic coast at w145, laycan September 13.
One shipowner said that while rates had plunged back in Europe there was still plenty of uncertainty now as the Gulf refineries were coming back online.
“The vessels that were fixed prior to Harvey are still about, and UKC-TA has obviously dropped,” the owner said. “In the end there were only perhaps 10 vessels that were fixed up there in the mid-w200s and I have a vessel in the w200 region that the charterer is trying to cancel.”
One gasoline market participant said there was talk of 1 million mt of gasoline already booked for September for trans-Atlantic destinations such as the US, Brazil, and Mexico, and that it would take a month before things return to normal on the US Gulf Coast.
In Europe, the charterers had so far this week drip-fed the tanker market in response to the rising freight rates but there would probably be more activity next week, the shipowner said.
“As for the US Gulf, if you clear out the 10-12 prompt ships there it’s looking the tightest I have seen in a long time as they are all ballasting to Europe,” the owner said.
Source: PlattsPrevious Next