Traders in the US refined products market moved quickly on Wednesday after the US announced a 60-day waiver on Jones Act shipments, snapping up internationally flagged medium range (MR) tankers for the voyages instead.
The availability of prompt vessels for quick Jones Act-style shipments — a market dominated by long-term time charters and restricted vessel supply — after the launch of the waivers has likely created strong arbitrage opportunities for charterers. This comes despite higher freight costs, at least initially, on some routes as international demand remains elevated, with buyers scrambling to secure shipments after Mideast Gulf flows largely ceased.
A charterer put the PIS Kalimantan, a Panamanian flagged MR tanker, on subjects for a US Gulf coast-Jacksonville, Florida, voyage today loading from 21-22 March at $2mn lumpsum, including demurrage at $115,000/d. The deal would equate to around $6.74/bl for the shipment. This is lower than the $6.92/bl for a Caribbean-bound voyage assessed on 17 March but much higher than a $3.70/bl voyage assessed for a Port Everglades-bound Jones Act voyage from Houston assessed on 13 March.
Meanwhile, another charterer put a Norden-owned MR tanker on subjects for a New York-Hawaii voyage at $6.5mn, or $21.92/bl. The deal was likely influenced by a US Gulf coast-Asia voyage that commodity trader Clearlake put the Boxer on subjects for $6.4mn, or $21.49/bl, earlier within the trading day.
These deals suggest that spot market activity for US cabotage over the next 60 days will depend on international freight levels, at least as long as they outstrip Jones Act $/bl rates. But Jones Act rates usually outperform international spot rates for the few vessel operators that are US flagged and US crewed. It remains to be seen whether international vessel operators will insist on at least typical Jones Act voyage rates if international freight rates begin to trade at a discount in the near term.
