Mideast Gulf clean tanker TCEs dip on more availability

  • Market: Freight, Oil products
  • 01/10/22

Clean tanker freight rates from the Mideast Gulf fell in the first week after the new year, as muted chartering activity over the Christmas and year-end festive holidays caused tonnage lists to increase.

Argus' time charter equivalent (TCE) rates for 75,000t Long Range (LR) 2 and 55,000t LR1 shipments fell by 55.22pc and 65.11pc respectively on 7 January to $5,261/d and $2,842/d from $11,749/d and $8,146/d on 24 December. TCE rates for 35,000t Medium Range (MR) shipments on the route also fell by 22.01pc to $6,816/d from $8,740/d.

TCE rates were also pressured lower because of higher bunker prices. Prices for very-low sulphur fuel oil bunker with 0.5pc sulphur content in Singapore rose by $30.04/t to $643.04/t on 7 January from $613/t on 24 December.

Tonnage availability grew between the penultimate week of 2021 and the first week of 2022 because of a lack of demand towards the end of the year. Chartering activity typically slows over Christmas and year-end festive holidays, as charterers and shipowners are absent from the market. Tonnage supplies rose as a result, with the LR2 vessel count doubling to 24 vessels from 12 over the period. LR1s and MRs both rose by 68pc and 53pc respectively to 37 and 55 vessels from 22 and 36 vessels.

Reported fixtures in the first week of 2022 also had a certain level of ambiguity as the market transitioned to updated 2022 Worldscale flat rates. Index linked fixtures, which tend to be done when the market shows a higher level of uncertainty also emerged on at least one LR2 and three LR1 fixtures. These factors combined and exacerbated an already illiquid market.

Argus at the end of 2021 had recorded a 40pc drop in spot naphtha fixtures to Japan from the Mideast Gulf and the west coast of India between 24-31 December with 10 fixtures consisting of five LR2s, three LR1s and two MRs against 17-23 December with 14 fixtures comprising nine LR2s, four LR1s and one MR.

A similar fall in volumes were also recorded by Vortexa. Loaded naphtha volumes from the Mideast Gulf and the west coast of India to Japan over the 24-31 December period fell by nearly 60pc to 110,787t (986,000 bl) from 268,539t from the 17-24 December loading window.

Weaker demand towards the end of the year was also attributed to several Mideast Gulf refineries, such as Qatar's state-owned QatarEnergy's Mesaieed refinery, winding down their output for planned maintenance starting from mid-January. Other refinery turnarounds are scheduled during the same period in Bahrain, Oman, Kuwait, Saudi Arabia and Abu Dhabi but these have still yet to be confirmed.

Argus TCEs
OriginDestinationSize ('000t)Unit 7 Jan '2224 Dec '21Unit7 Jan '2224 Dec '21
Ras TanuraChiba75WS100130$/d5,26111,749
Ras TanuraChiba55WS100132$/d2,8428,146
Ras TanuraChiba35WS124142$/d6,8168,740

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