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Asian Aframax Market Sees Rally on Busy Activity

Asian Aframax rates saw a resurgence this week on the back of firm cargo demand in Indonesia/Singapore. Other contributing factors include a robust Med market due to the lifting of force majeure on Sharara crude from Zawiya, potential weather delays in North Asia as a result of Typhoon Talim as well as higher bunker prices. Rates for the key Indo/Japan route basis 80 kt jumped by w17.5 points w-o-w to w110 as of today, crossed the w100 mark after languishing around w80 levels for the past two months.

A pick-up in fixing activity in September in the Indo/Singapore region helped to thin the position list, turning market sentiment bullish. Stubborn owners and charterers came to a standstill when owners refused to lock in earnings at previously low levels for long-haul voyages such as Indo/Aus. As such, charterers were forced to pay up to cover prompt cargoes. A jump in fuel oil shipments from Singapore to China also lent support to the Aframax market.

China has seen a recent increase in bitumen mix imports which are used as feedstock by independent refiners. Chinese bitumen mix imports stood at 3.3 mmt from January to July, up by 35.3% y-o-y. With a handful of longhaul cargoes still outstanding and surge in prompt cargo volumes, we expect rates to strengthen further. Similarly, rates for an AG/East run basis 80 kt grew by w7.5 points on the week to w100. A lack of ballasters and subsequently modern tonnage in the AG region has pulled up rates despite lacklustre activity
Source: OFE Insights

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