Crude and product tanker marched higher across most routes on Tuesday, led by an 80% surge in suezmax earnings.
Time-charter equivalent (TCE) earnings for suezmax crude tankers rebounded nearly $6,000 in one session to approach $13,500 per day, just days after touching the lowest level since February.
The bounce-back in turn was fuelled by a rapid rise in rates for the TD20 route from West Africa to the UK and continental Europe, where a journey to lift a 130,000-tonne cargo stem jumped nearly 16 WorldScale points to WS 111, according to Baltic Exchange data.
Shipbroker Howe Robinson said the rise in rates was fuelled by increased activity in West Africa, though that could tempt larger vessels into the market.
“We have already begun to see some interest from the VLCC market,” the London firm said.
The suezmax spike helped lift the Baltic Dirty Tanker Index upward by 15 points on Tuesday to reach 1,147, the highest level for the spot market indicator in more than a month.
The exchange recorded TCE rises across all three main crude tanker classes, although VLCCs remained firmly in loss-making territory.
But there are positive signs in the Atlantic, amid fixtures to load cargoes in the US Gulf of Mexico and the opportunities to cut into the suezmax market.
US Gulf activity
“With the activity in the US Gulf, coupled with the increasing rates for TD20 that we are currently seeing, the VLCCs might well soon be back in play from West Africa with suezmax stems and co-loading breathing a new lease of life,” Howe Robinson said in its daily tanker market update.
Among recent fixtures, Vitol agreed to pay $2.7m, or the equivalent of $19,000 per day, to take Frontline’s 321,000-dwt Front Endurance (built 2009) from the US Gulf to the UK or continental Europe, according to Tankers International.
That’s slightly higher than the last done rate of $2.65m for the same journey on 1 June.
Meanwhile, the Baltic Clean Tanker Index inched upward by 35 points to 1,621 on Tuesday, lifting it to a nearly two-year high.
The rise came on the back of larger LR tankers and the Pacific market for MRs.
TCE earnings on the benchmark TC5 route for LR1s travelling from the Middle East to Japan jumped more than $7,000 in one session to just over $47,800 per day.
Howe Robinson looked positively on the road ahead for tankers in the TC5 trade, as a tight list of ships comes up against nine outstanding cargoes.
But the Atlantic MR market provided the tanker sector’s lone negative note of the day.
While the Baltic Exchange recorded rates on the front-haul route from Europe to the US East Coast at nearly WS 391, Howe Robinson said deals still on subjects on the trade were done at WS 370.
“Another day of limited enquiry has the balance of supply/demand edging more and more in charterers’ favour”, the firm said.
“Will owners be able to hold their mettle, or could we see some owners look to book the rates on offer while the current earnings are still on the table?” the broker asked.