Americas clean tanker freight posts 32%-60% loss as ballasters alleviate tonnage crunch
An armada of European and West African ballasters coupled with improved replenishment of tonnage on the Americas short-haul routes forced freight for Medium Range tankers down 32%-60% on the US Gulf Coast-loading clean tanker benchmark routes to Brazil, Chile and the Caribbean.
Mabanaft placed a Norient Medium Range tanker on subjects at $1.5 million April 20, $750,000 lower than last-assessed for the USGC-West Coast Central America route.
“I thought it was an error in the type,” said a market source, noting the shock-factor of each trade seen.
Another source said that freight continues to weaken with each additional tanker booked.
“Everything is on a case-by-case basis, nothing will [trade] on parity with last-done trades,” the source said.
The benchmark 38,000 mt USGC-Chile route was assessed at $1.8 million April 21, down 55% from its record set on April 8. Rates for the USGC-Brazil long-haul run also saw similar declines. The Joyce was placed on subjects April 6 by Unipec at Worldscale 500, with a $65,000/d price tag on demurrage. That route has since fallen 55% to w225 by April 21.
The short-haul 38,000 mt USGC-Caribbean saw the most volatility, falling from $2.05 million on April 8 to $800,000 on April 21, a plunge of 60%.
Laycan dates pushed back
According to position lists seen by S&P Global Commodity Insights, 26 MRs are in ballast, set to arrive on the USGC between April 22-May 5. Additionally, 8-12 MRs are ready for prompt loading on the USGC April 21, as compared to a depleted prompt list seen day-on-day since April 1. Skewing the fixing balance as six to 15 cargoes posted for the market for week ended April 8 despite tonnage dwindling.
Americas charterers have started to post laycans back a few days further into the normal fixing windows so that tonnage competition can bring prices down. For example, Valero April 21 posted a cargo to primarily discharge in Europe, with options to disport in Brazil and Northeast Asia with an April 27 laycan, six days out and yet left uncovered despite tonnage availability.
“It’s like leaving money on the table in a falling market, if you fix at $2.8 million on a Monday but come Wednesday it’s at $1.5 million then charterers miss out on a lot,” said a market source.
Exports pressure refinery utilization
US refined product exports have risen sharply in April, according to US Energy Information Administration data, but they are likely primed for correction. Exports rose 14% week on week to a record 6.81 million b/d for the week ended April 8, EIA data showed. The most recent data shows exports have since slipped to 6.33 million b/d for the week ended April 15.
“The bottom for this correction is hard to say, as there aren’t any more cargoes out to test,” said a charterer. “If Europe bans Russian oil, depending on the timeline, it will be bullish for a certain part of the freight curve,” noting that the US Gulf Coast still has a strong position to play on the world stage in trade.