Asian dirty tanker rates see biggest one-day gain of 2019 as Cosco sanctions bite

Asian dirty tanker rates on most vessel sizes for Persian Gulf loading saw their biggest single-day increases so far this year on Monday as US sanctions on subsidiaries of China’s Cosco Shipping squeeze supply, pushing up rates to multi-year highs.

S&P Global Platts assessed the benchmark Persian Gulf-China VLCC rate 20 points higher to Worldscale 120, equivalent to $22.58/mt — the highest in more than 11 years.

The US sanctions on Cosco Dalian company, imposed on September 25 for violations of sanctions against Iran, have reduced global VLCC supply by 5%.

Suezmax rates on the Persian Gulf-East route meanwhile increased 27.5 points to w155 and Aframaxes on the same route jumped 20 points to w160.

Suezmaxes have gained almost 60 points on the route since the US sanctions on Cosco affiliate companies were announced. This translates to a rate of $29.74/mt, the highest in almost six years, according to Platts data.

Strong demand in the Middle East and West Africa have pushed up Suezmax rates, according to market participants.

This has prompted charterers to explore the possibility of combining cargoes for loading into a VLCC, a dirty tanker broker said. A Suezmax typically carries a cargo of 1 million barrels while a VLCC can carry about double that.

Due to tight supply, even the age of ship does not really matter at this juncture, another broker said. Usually, ships that are more than 15 years old enjoy a discount due to the lack of regulatory approvals.

For Aframaxes, the current PG-East rate translates into $27.81/mt, an almost four-year high, according to Platts data.

The strong loading demand from the Mediterranean and the Black Sea region are prompting Aframax owners to aim for higher returns in the East of Suez region as well. Failing that they have the option to move their ships for loading in the West, sources said.

Some Aframax owners have already sent their ships to the West of Suez region, a broker said.
Source: Platts