WAF-UKC Suezmax rates jump on firm US Gulf Aframax market, tighter fundamentals
The West of Suez dirty tanker market on Jan. 4 saw a significant jump in Suezmax rates amid a flurry of fixtures for loading in West Africa and the Black Sea, with sources citing a busy US Gulf Aframax market and a tightening tonnage list.
The Suezmax market burst into action after experiencing a relatively quiet start to the year, with four fixtures reported in WAF and two in the Black Sea on the day.
In the last-done voyage loading in WAF, Repsol put the Sonangol Huila on subjects for a 130,000 mt cargo for discharge in Spain, off a Jan. 19 laycan, at w125.
In the Black Sea, Petroineos put the Delta Mariner on subjects for a 135,000 mt cargo loading in the Caspian Pipeline Consortium terminal and discharging in the Mediterranean, off a Jan. 24 laycan, at w135.
Despite being well into the January loading window, for voyages loading in WAF and Europe, Suezmax, VLCC and some Aframax fixtures are still being settled basis 2023 Worldscale flat rates. Market sources say they expect the Suezmax and Aframax markets to switch over to the 2024 flat rates by the end of January.
Normalized into 2024 Worldscale values, Platts, part of S&P Global Commodity Insights, assessed freight on the 130,000 mt WAF-UK/Continent route at w137.5 on Jan. 4, up w17.5 on the day, while the 135,000 mt CPC-Med route rose w7.5 on the day to hit w142.5.
Converting from 2023 to 2024 flat rates has increased Worldscale rates for Suezmax rates by 10-15 points, as the 2024 flat rates are lower than the 2023 ones due to a fall in bunker costs. However, the recent firming still represents a significant increase in absolute terms, with Platts assessing freight on the 130,000 mt WAF-UKC route at $22.78/mt on Jan. 4, its highest level since Nov. 8.
Skyrocketing US Gulf Aframaxes
Sources pointed to a firming US Gulf Aframax market as the main driver for the increase in Suezmax rates on the other side of the Atlantic.
“The Atlantic is hot, and Afras in the US Gulf are very busy,” a UK-based Suezmax broker said.
Active inquiry following the Christmas and New Year holidays has left owners with the upper hand in negotiations for trans-Atlantic voyages discharging the UK Continent, according to market sources.
Platts assessed the benchmark 70,000 mt USGC-UKC run, basis Worldscale 2024 flat rates, at w275.25, up w58 since the first trading day of the year on Jan. 2.
A second UK-based Suezmax broker also put the increase in rates for the WAF-UKC run down to tightening fundamentals in the WAF region.
“It’s been a busy, busy day, with lots of vessels going on subs,” the broker said.