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SHIPPING: Asia MR tanker rates hit six-week low on oversupply; US bound freight at premium

Asian Medium Range, or MR, clean tanker rates fell to a six-week low Sept. 15 due to an oversupply, but strong demand for moving jet fuel to the US and delays because of the Typhoon Chanthu are expected to lift prices over the next few days, sources said Sept. 16.

The rates for latest deals concluded on key South Korea-Australia and Singapore-Australia routes dropped 35 Worldscale points in less than three weeks to Sept. 15, S&P Global Platts data showed. The rates hit 2021 high mid-August.
The demand for delivering cargoes of gasoil, gasoline and jet fuel into Australia was stable, but the number of ships available for moving them had increased sharply, said a broker, who was part of one of the concluded deals.

Some of the deliveries to Australia were sourced from Japan and Taiwan, but this was not enough to support the rates, sources said. On an average, up to 20 MR cargoes are shipped each month from Southeast and North Asia to Australia.

Meanwhile, ebbing China demand for loading distillate cargoes after a strong run in the second half of August also pressured MR rates, sources said.

The country’s exports likely rose in August from July following the release of a second batch of quotas. With most of China’s near-term incremental requirements fulfilled, tanker owners are focusing on South Korea and Singapore loadings, which were mostly stable, one of the ship brokers said.

China gasoline exports almost halved in July to 741,000 mt, from June, while its gasoil exports fell over 40% month on month to a 10-month low of 1.39 million mt, according to government estimates. China is expected to release export data for August in the week starting Sept. 20.

A delay in port operations recovery in North Asia in the aftermath of Typhoon Chanthu boosted market sentiment in the week started Sept. 13, but the support is expected to be temporary because of the ample ship supply, sources said.

Typhoon Chanthu slammed into the Philippines and Taiwan over Sept. 11-12 , disrupting tankers’ schedules and forcing some charterers to find replacements, as several Asian ports, including China’s Shanghai and Ningbo-Zhoushan, temporarily suspended operations.

JET FUEL FREIGHT TO US AT PREMIUM

The demand to move jet fuel cargoes to the US from North Asia has risen after Hurricane Ida hit the US Gulf Coast in August.

Owners were seeking a hefty premium to undertake a voyage from East Asia to the US, sources said. A Vitol relet on the Japan-US West Coast route was placed on subjects by BP around $1.2 million, up almost 20% from start of the week, with an option to discharge in Australia, sources said. The daily MR earnings for owners on both these routes was more than $10,000 at current rates, according to broker estimates.

Tonnage pile up in the US Gulf Coast, however, made some of them reluctant to seal a deal.

“USWC is not a good place to open a MR because freight rates are poor in the Americas,” a source with an MR owner said, as there were many potential ballasters in the region.

Short haul rates had taken a hit in Asia due to a surge in supply of ships which recently discharged cargoes loaded from China. Most of these ships were looking for the next round of employment, sources said.

Daily MR earnings on the South Korea-Singapore route were less than $1,000, broker estimates showed.
Source: Platts

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