Long-haul movements from India may generate a recovery in rates

The clean market is grabbing more headlines. US farmers have been busy in their fields burning so much diesel that US stock levels fell 10 per cent. Refinery maintenance also led to falls in other product stock levels.

Falls in US petrol prices led to increased consumption and falls in stocks. These can easily be augmented by imports from Europe, where trans-Atlantic clean rates showed signs of strengthening.

Not so for diesel fuel. There is a shortage of supplies in Europe, hence the high product price, and none to spare for those across the Atlantic. Some suggest that low-sulphur supplies can now be sourced from India, where poor margins in the Asian market have persuaded refiners to look farther afield for fuel exports. This is better news for LR1 and LR2 owners, who have been having a poorer time in recent weeks. Long-haul movements from India to Europe and the US would generate a recovery in rate levels.

In crude, reports from the Arabian Gulf suggest that the Saudis will be cutting shipments, mainly to Japan and South Korea. This has usually pushed many Japanese and Korean oil company relets onto the market and brought downward pressure on rates.

It is a common perception that the chartering departments in both countries do not necessarily have the same profit motive as seen with independent owners. The priority is more to keep the ships in use without incurring downtime than to look closely at the bottom line. But for the time being, rates remain reasonably steady in the Gulf. With 108 VLCC fixtures concluded for October loading and 105 for November, one can assume that this month's programme is completed. Five fixtures are reported for December loading, but with the Saudi cutbacks, brokers expect about 95 deals next month. Rates for double-hull tonnage to the US Gulf remain at about WS67.5. South Korean and other eastern cargoes are attracting about WS80 for doubles and WS70 for singles.

Freight rates from West Africa to the US have softened. Previously, Conoco fixed the Regulus Voyager at WS95, but this has weakened to about WS87.5. Rates from West Africa to East Asia are also down. WS75-WS80 is their best estimate.

Suezmax

In the Suezmax sector, programmers are looking at the 'back-on-stream' dates for US refineries and planning crude movements accordingly. From a base of WS107-WS110, rates are expected to climb steadily as demand for sweet West African crudes rises. The latest fixture is that of the 2002-built, 159,993dwt Genmar Orion, which was concluded by Exxon at WS110.

Aframax

In the Aframax sector, rates east of Suez are fairly steady at WS155 for Arabian Gulf and Indonesian liftings. The same cannot be said of the Western Hemisphere trades. Northwestern Europe and the Med have suffered from falling rates, both down below WS120. At a higher level but still easing are Caribbean routes, where rates have dropped about 30 points to WS230 for the normal 70,000-tonne cargo.

The writer is a shipbroker and marine consultant with more than 40 years' experience in the tanker and dry cargo markets.