Aframax rates in southeast Asia are likely to rise ahead of the lunar new year to meet a pre-holiday rush to secure tankers.
Freight rates for 80,000t shipments for the southeast Asia to Australia and from Indonesia to Japan routes have fallen by about 8.5pc since the start of the year to WS160 and WS162.50 respectively on 24 January. Regional freight rates have been subdued since the start of the year because of limited demand and a surplus of regional tonnage.
But market participants expect freight rates to start rising because of the pre-lunar new year rush, which usually happens as most shipowners and charterers try to cover their positions before the long holiday weekend. The lunar new year holiday runs from 10-12 February this year in southeast Asia.
Regional fixtures are already gradually rising, with a total of three fixtures concluded for 15-19 January compared with two fixtures for 8-12 January, according to Argus data.
Shipowners could also be encouraged to raise offers because of higher bunker fuel costs. Prices of very-low-sulphur fuel oil (VLSFO) with 0.5pc sulphur content in Singapore rose by around 5.8pc on the week to $624/t on 23 January in line with Ice Brent crude futures.
An increase in arbitrage crude prices, driven by increased freight costs for eastbound voyages from the west caused by disruptions in the Red Sea, has also led to higher prices of March-loading crude cargoes from other regions to Asia-Pacific, traders said. The rise in arbitrage crude prices has lifted demand for short-haul crude supplies from Vietnam, Malaysia and Australia, they added.
About 33 vessels are free of cargo in the southeast Asia region as of 23 January, a shipbroker said. This was down from about 45 on 16 January and around 34 on 11 January, marking the two highest levels for the month, according to market participants.
Regional cargo movements were previously subdued because Asian buyers shifted some of their January-loading crude purchases away from Asia-Pacific to take advantage of lower arbitrage crude prices in November 2023. This subsequently led to the increase in vessel availability in the region in early to mid-January.
Argus' time charter equivalent (TCE) rates for the southeast Asia to Australia and from Indonesia to Japan routes fell by an average of about 15pc to $35,289/d and $35,323/d respectively before Singapore's market close on 24 January.
