In Hellenic Shipping News 30/06/2017
It’s been a disappointing year for the product tanker market, but things could be soon moving upwards for clean tankers. In its latest weekly report, shipbroker Gibson noted that “although the overall performance in the product tanker market remains disappointing, some positive dynamics have been seen in the MR segment (25,000 to 55,000 dwt). Spot earnings are still weak; yet, MRs have fared somewhat better than larger product carriers in recent months. Since November 2016, average MR earnings for representative voyages both in the East and in the West have been above those for LR2 and LR1 tankers trading on benchmark trades in the East”.
According to the shipbroker, “the support has come primarily from the Atlantic Basin. Typical delays and disruptions during the winter in the Northern Hemisphere provided opportunities for temporary firming in rates, while the market has also been aided by robust Former Soviet Union (FSU) clean petroleum exports and strong chartering demand into West Africa. In addition, there has been occasional transatlantic arbitrage, although this has been challenged by high of stocks in Europe and the US. Finally, exports of US clean petroleum products have continued to increase, with the growth focused largely on gasoline. While the above is history, the important question now is what to expect over the next few months. The anticipated pick up in US gasoline demand in summer due to the driving season could aid domestic gasoline production and seaborne imports into the US Atlantic Coast:.
However, as Gibson noted, “stocks remain at very high levels, potentially limiting tanker trade. The EIA weekly data shows that since April gasoline inventories in the PADD1 (East Coast) have been running above or close to the upper limit of the seasonal average range, while the latest four-week average of gasoline imports indicates that regional seaborne imports are down year-on-year by over 200,000 b/d or over 27%. In the US Gulf (PADD3), both gasoline and distillate stocks are also at or close to their five year high for this time of the year. In contrast to the developments on the Atlantic Coast, high inventories in the US Gulf could translate into strong product exports out the region, with gasoline mainly flowing to Latin/South America and distillate heading both to Latin America and to Europe. Distillate exports to Europe, in particular, tend to be stronger during the summer. If the same trend continues this year, it could support MRs trading out of the US Gulf but at the same time could lead to a build up of tonnage in the UK Continent and the Mediterranean, particularly if the gasoline trade from Europe to the US Atlantic Coast remains weak”.
According to the shipbroker, “the North West European market could also be threatened by the fact that Russian clean petroleum products exports tend to slow over the summer/early autumn and there is no indication that this year will be any different. Furthermore, indications are that there will be an increase in LR stems out of the Baltic at the expense of MR cargoes in the months ahead. Although these potential developments do not look positive for MRs trading in Europe, strong product demand into West Africa could prevent or at least reduce the risk of building up tonnage availability. Besides, there is also a wild card – the US hurricane season. It is impossible to predict how active this year’s season will be but potential disruptions to transatlantic trade in either direction and thus the risk of a temporary spike in rates should not be ignored”.
Meanwhile, in the crude tanker market this past week, in the Middle East, “Busier for VLCC’s – as expected – but also, as expected, availability proved easily adequate to meet demand and Owners failed to push rates higher than low ws 50’s to the East and mid/high ws 20’s to the West. There don’t seem to be any pinchpoints in near sight so Owners will be relying upon another pick up in the fixing pace to create the necessary momentum and that must remain a doubt. Suezmaxes saw steady interest, but never a rush, and tonnage lists never became trimmed sufficiently to allow for any grip. Rates slid off to just under ws 65 to the East and to ws 25 to the West with no early U-turn likely. Aframaxes saw a very modest improvement in volume but rates merely stagnated at 80,000 by ws 95-ish to Singapore and similar values called into next week too.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
