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The crude tanker market keeps improving, with rates being at the highest level since June.
Suezmax max continued higher after two weeks of significant w-o-w gains; however, the strength of the move slowed as enquiry was limited. Rates on the West Africa to the UK Continent route continued rising w-o-w, in turn supporting rates in the Middle East, which moved higher to close the gap with rates in West Africa. Elsewhere, rates remained strong in the Black Sea and on the Black Sea to Mediterranean route.
“Suezmax rates continue higher, but at a slower pace, while Aframax rates edge higher with continued strengthening in Mediterranean routes”
Aframax rates in the Mediterranean and Black Sea were strong last week, in line with Suezmax trends, with rates on the cross-Mediterranean route rising, supported by recent bad weather and a “thinning positioning list”. Replacement enquiry may support rates further next week. However, UK Continent and Baltic rates eased w-o-w, but with potential for improvement next week as the position list thinned towards the end of the week driven by fixing or ballasting to neighboring markets.
“VLCC rates surge across major routes as owner sentiment remains strong”
VLCC rates rose markedly across the board, with owner sentiment strengthening. The Middle East Gulf to China route rose w-o-w in a busy week of off-market fixing in the VLCC market. Charterers are expected to continue fixing off-market to not disturb prices and are expected to drip-feed the market with supply.
Aframax ECO, 12 months TC
Aframax, Average spot
Suezmax ECO, 12 months TC
Suezmax, Average spot
Source: Clarksons Research
Bulk markets continue facing excess tonnage
Capesize rates remained subdued with a further softening last week, with rates on the Dampier (Australia) – Qingdao (China) route declining another 7%, and with rates in the Atlantic also dropping further. Overall fleet-weighted average Capesize spot earnings fell 21% w-o-w to USD 14,344/day; however, there is potential for support in the Atlantic next week as tonnage is currently tight.
“Overall weak demand was the stronger force in bulk markets despite some support from poor weather disruptions, and some concentrated areas of tight tonnage, and strong enquiries.”
Panamax markets in the Atlantic received support from poor weather disruptions; however, rates declined further as there was limited activity. In the Pacific, enquiry was strong; however, rates remained stable and declined somewhat into the end of the week as downside rate developments in the paper market pressured owners.
Handysize markets saw insufficient demand to offset tonnage availability in both the Atlantic and Pacific basins. The Atlantic saw increased cargoes towards the end of the week; however, insufficient to move rates higher, while there was plentiful tonnage in the Pacific, dragging rates lower.
Capesize, 12 months TC
Kamsarmax, 12 months TC
Source: Clarksons Research
Earnings season offers interesting market insight
Leading PCTC companies Wallenius Wilhelmsen and Gram Car Carriers both reported this week updating their market views during earnings presentations. Wallenius Wilhelmsen CEO Lasse Kristoffersen his outlook saying the following:
“There is no doubt that the driving forces in this market are increasing exports out of Asia. And in particular, increasing exports out of China. And if you do the numbers since 2019, you will see that there has been a significant growth in the volumes out of China. (…) And the reason why this is important for our industry is that this is adding a lot of distance. So, if you look at the growth, in the distance traveled, this is up 10% since 2020. In the same period, the world fleet is only up 3%. So, the reason why we have a very strong market now for shipping is basically that we have structural significant flows of cargo from Asia, with the longer distance, basically, with the same fleet as we had 3 or 4 years ago. And this growth out of China is very robust.”
Gram Car Carriers, added to the sentiment of continued strong demand from China including the following statement:
“China… has built enough auto factories to make every car sold in China, Europe, and the United States.”
Overall, both companies point towards continued structural shifts in the market that add to the distance traveled and support the market over the medium term.
5000 CEU – 12 months TC
6500 CEU – 12 months TC
Source: Clarksons Research
| Type | Tons | Week 44 | Week 43 | + /- |
|---|---|---|---|---|
| VLCC | 300t. | $ 57.250 | $ 57.250 | 0 % |
| Suemax | 160t. | $ 47.250 | $ 43.250 | 9 % |
| Aframax | 115t. | $ 44.750 | $ 42.750 | 5 % |
| MR | 50t. | $ 28.500 | $ 28.500 | 0 % |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| VLCC | 125 | 98 | 74 | |
| Suemax | 95 | 78 | 61 | |
| Aframax | 83 | 70.5 | 55 | |
| MR | 51 | 43.5 | 33 |
| Type | Tons | Week 44 | Week 43 | + /- |
|---|---|---|---|---|
| Capesize | 180t. | $ 14.500 | $ 15.000 | -3 % |
| Panamax | 82t. | $ 13.250 | $ 13.500 | -2 % |
| Supramax | 58t. | $ 11.000 | $ 11.500 | -4 % |
| Handysize | 38t. | $ 11.000 | $ 11.250 | -2 % |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| Capesize | 64 | 48.5 | 19.5 | |
| Panamax | 37.5 | 32 | 23 | |
| Supramax | 36 | 29.5 | 20 | |
| Handysize | 32 | 25.5 | 17 |
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