Refinery maintenance upsets tonnage balance

VLCC

Over the past week there was minimal activity for VLCCs on Arabian Gulf/East voyages.

There was one fixture reported for South Korean discharge, the Grand Mountain at Worldscale 167, and one to Japan, the Bright Artemis at Ws 137. One would normally expect the number of fixtures to be well into double figures for a week.

Also, the two ships were fixed about four days apart and the disparity in the rates indicates the slide in freight levels.

We do not have to look very far to see the reason. Many refineries in South Korea and Japan have closed for routine maintenance, thus releasing relet tonnage on the market.

Many of these vessels are too small for voyages to the west and are thus queuing up for suitable employment to other eastern destinations.

Thai charterers PTT entered the market for a voyage Gulf/Thailand, but needed high quality tonnage. They reviewed a dozen offers and fixed a double hull ship at WS122. Had they been able to accept a single hull vessel, the rate could well have been close to WS100.

About 75 cargoes have now been covered for March. The mathematics is easy to do. The tonnage list shows 40 ships able to give March cancelling and about 20-25 more cargoes to lift.

It seems likely rates will drop below WS100 soon.

In the Atlantic basin, rates eased slightly early in the week for West Africa to US Gulf voyages and there has been a lack of enquiry since.

The five point fall which occurred may well be just the start of the decline as charterers adopt wait-and-see tactics.

IOC fixed two Frontline ships for India at $4 million (Dh14.68 million), but Asian refinery maintenance is affecting the West African to the Far East market.

Suezmax

At last the Black Sea saw some movement. Some 37 vessels were fixed in the Western hemisphere during the week.

There was a lack of activity from West Africa, although rates only eased slightly from WS150 to WS 145, whereas Black Sea rates move up from WS155 to WS160.

In contrast to the previous week, there was less enquiry in the east-of-Suez arena. Rates settled to about WS155 for AG/West and more than WS200 for AG/East. The weakness in VLCC rates may pull Suezmax rates down in the east, but probably not in the west.

Aframax

In the Far East and the AG rates firmed. Freights from Indonesia to Japan increased to WS250, Indonesia/Australia to WS275 and AG/East was back up to WS300 good news east of Suez.

In the Mediterranean, the excitement of last week cooled down to the levels of the previous week. They closed the trading period at WS140 for cross-Med voyages.

Like any short sea market, however, it can gain or lose large amounts in a week. It may have a little bit farther to fall but after that, the sky is the limit.

The UK Cont market remained steady and unexciting, with only the ice-class tonnage keeping its collective head well above water.

In the Caribbeans and East Coast Mexico, rates were stronger, as more cargoes than usual were quoted and fixed. The market finished the week at WS 260 and still firming.

Capesize bulk carriers

After a dip at the beginning of the week, rates started to slowly climb again.

There is a lot of optimism as rates remain stubbornly high, brought about not by expanded trade so much as by port congestion.

Remember the 140 new vessels expected to be delivered between now and December 2006. Also remember: Tears before bedtime.

Panamax bulk carriers

This sector also suffered a slack time but recovered on a higher note.

Handymax

This sector climbed higher after a rough time last year and looks a good bet for the future.

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