Prompt spot charter rates in the Atlantic fell further on Friday, reversing the incremental gains made in previous weeks as subletting offers increased and a closed inter-basin arbitrage weighed on the charter market.
The Argus-assessed round voyage rate for US-northeast Asia journeys — ARV3 — fell to $78,500/d from $81,500/d at the previous close, having held above $80,000/d since 21 June. The equivalent ARV2 for US-northwest Europe similarly fell, and was assessed at $77,250/d, down from $80,250/d at the previous close.
Increased subletting activity on the spot market has supported vessel availability in recent days, with some trading firms continuing to undercut offers from independent owners in an already softening market. And despite sublet offers buoying the number of open vessels for hire on a prompt basis, inter-day volatility in northeast Asian delivered prices and at the Dutch TTF gas hub has reduced the incentive for charterers to add prompt shipping capacity to enable inter-basin deliveries.
The inter-basin differential tightened further on Friday, as northwest European des prices rose sharply, contrasting losses on near-curve Argus northeast Asian (ANEA) des prices, and the ANEA September price moved to a 5¢/mn Btu discount to the northwest European second half of August price, switched from $1.29/mn Btu premium at the previous close.
Congestion at the Panama Canal has further hampered the opportunity for firms to secure wider margins when delivering volumes from the US to northeast Asia via the shorter route, with the number of days that vessels can expect to wait at the Panama Canal for Pacific-bound transit increasing sharply over the past week. Prompt transit slot availability remains limited, with larger firms typically better able to secure bookings ahead of time to cross the canal, market participants said. This has supported the number of US-loaded vessels heading via the Cape of Good Hope, which adds about 16-26 days to a round trip from the Gulf Coast to northeast Asia, assuming vessels sailing at an average speed of 18 knots. But with a closed inter-basin arbitrage, the incentive to ship vessels the longer journey to the Pacific could remain limited.
And an increase in firms securing multi-month or one-year charters has also likely reduced the demand for chartering vessels on a prompt basis. The multi-month charters that typically extend through the fourth quarter reduce charterers' exposure to any spike in spot charter rates during the winter months.
