Section 301

This week, many in the shipping industry likely heard about Section 301 of the US Trade Act for the first time. This provision allows the US to address unfair foreign trade practices affecting US commerce. Last year, the US Trade Representative (USTR) launched an investigation into Chinese shipbuilding and maritime practices, concluding in January 2025 that China engaged in unfair practices. As a result, the USTR has published a proposed action plan and is accepting public comments until March 24.

The proposal is highly aggressive, featuring disproportionately high fees. It outlines several complex options targeting Chinese operators and/or China-built vessels, including those on order. The final proposal may incorporate one or more of these measures. Notably, the definition of an “operator” remains unclear – it could refer to an entity that owns or effectively controls a vessel. The vague wording, perhaps intentional, leaves room for interpretation.

In terms of measures under the USTR action plan, the first section includes a proposal to charge a Chinese operator a $1mln per US port entry. The second section proposes to charge up to $1.5mln for a port call by any Chinese-built ship. Within this measure, there is also an option to adjust the total fee lower, depending on the percentage of Chinese-built ships in operator’s fleet, although it is unclear whether this is in addition or instead of a flat $1.5mln fee. A third measure targets orders at Chinese yards, with the highest proposed fee set at $1mln for a port call for an operator who has over 50% or 25% of their orderbook at Chinese yards.

With 20-25% of the global tanker fleet above 25,000 dwt (excluding LR1/Panamaxes) built in China, tanker operators face significant exposure to these potential changes. Chinese operators are particularly vulnerable, as one section of the proposal specifically singles them out. It is worth noting that Chinese companies own at least 15% of the global VLCC fleet, though their ownership share is considerably smaller in other tanker segments.

The market impact will depend on which measures – or combination of measures – are implemented. Measures that focus directly on Chinese operators and/or just Chinese-built ships without reference to an operator’s fleet would likely be less disruptive than those considering an operator’s overall fleet composition. Given that US crude exports and imports account for 9% and 7% of global trade, respectively, and clean exports for 13%, the tanker market has enough flexibility to reallocate Chinese-built or Chinese-owned tonnage away from US ports. However, this will likely cause inefficiencies, initial disruptions, and missed trading opportunities. Freight rates for US-bound voyages may rise due to limited vessel availability. A measure targeting newbuild orders would probably have a similar impact. While the overwhelming majority of tanker orders are at Chinese yards, these orders represent only 11% of the existing fleet, meaning that only certain owners will be affected.

The most disruptive measure would be the one linking penalties to the share of Chinese-built vessels in an operator’s fleet. Currently, over 60% of the global tanker fleet is owned by companies with at least one China-built ship, while 40% of owners have at least 25% of their fleet built in China. If implemented, this measure would have profound implications for US-linked freight rates, arbitrage economics, and even domestic oil and refined product prices. Any version of the USTR final proposal would likely lead to discounted values for Chinese-built ships and a premium for Korean and Japanese vessels, whilst firm orders may be subject to alterations. It may also incentivize operators to split their fleets into smaller entities to minimise US exposure. Much remains uncertain, and a clearer picture will emerge after the March 24 consultation period. Given that this policy is being decided under a Trump administration, the market is understandably concerned that it could take a more aggressive form.

Tanker orderbook at Chinese yards as % of existing fleet

Crude Oil

East

The VLCC market is showing a softening trend after a positive start earlier in the week. Initially rates were buoyed after an increased level of activity for second decade. However, a drop in fresh activity and a large volume of ships failed contributed to a shift in sentiment. Charterers now appear to have the upper hand and with the volume of available tonnage increasing it is hard to see a recovery coming for the start of next week. Today we are calling AG/China WS58 and AG/USG WS31.5. 

Suezmaxes in the AG are looking firmer than at the start of the week with limited firm positions for Basrah suitable ships. Next done owners will be looking to push above the 140 x WS60 level via C/C for modern approved tonnage. For East runs, tonnage has also tightened up and with improvement in rates for short runs it seems likely we will push above 130 x WS105 next week.

In Asia, Aframaxes finish the week on a quieter note but with a trimmed tonnage list as charterers continue to work privately with some outstanding cargoes and possible replacement jobs that could push rates up. Another positive is the number of owners that have decided to ballast to Vancouver because of expected increase in export volumes for March. Earnings for those runs have also attracted tonnage from N. Asia and EC Australia, as the Indo region continues to be flat. A recent TD14 run tested the market, and it concluded at WS115. We expect rates to hold steady moving into next week.

West Africa

VLCCs in WAF have been characterized by a lack of volatility and significant reduction in market activity. One of the reasons for the this is likely to be the IE week activities in London and as a result the tonnage is starting to build up again.  The market requires a fresh test, and we expect next week should be more active as charterers move to cover end march stems. Today we are calling WAF/East in the region of WS58.

Suezmax markets in West Africa are looking firmer with an improving USG market and achieving less than last feels though it will likely be quite the challenge. For a TD20 run, there will be heavy resistance to breaking below the last-done 130 x WS85 level though we feel there’s a good chance of repeating this rate with a few prompt vessels to keep the pressure on. 

Mediterranean

Med enquiry has also been limited this week, and rates have fallen away. TD6 today owners will be looking to push rates back over the most recent WS100 done. The repeatability of this rate is questionable, and we feel they are likely to succeed in their goal of pushing the market. Libya/Ningbo today is steady, and owners will likely be looking to fix around the $5.4m level.

In Med Aframaxes, IE week’s impact is never entirely predictable, yet it consistently slows the flow of information. This time was no exception, as a steady trickle of cargo led to challenging trading conditions for owners. The market dipped to WS122.5 for a benchmark Ceyhan run, but despite accurate reports circulating, it took time for this reality to sink in. However, multiple itinerary delays have introduced some date sensitivity for the first decade. Coupled with a more optimistic outlook in the US, the local market could see just enough momentum for a slight rebound heading into next week.

US Gulf/Latin America

It’s been a challenging week for VLCC owners in the USG region with rates softening daily as ships struggle to find suitable employment. There has also been some uncertainly after the US plan to target up to $1.5m for every port call by a Chinese built ship which would have huge impact on available tonnage. There was more activity from Brazil and rates remained steady but are likely to come under pressure with the lack of fixing in other areas of the Atlantic. Today we are calling USG/China $8.10m & Brazil/China WS58.

North Sea

A busier latter part of the week for Aframaxes post IE gave the market a bit of a clear out but as ever fixing remained steady at WS110. The US is warming a little and attracting eyes that way but again not enough to cause an imbalance in Atlantic tonnage.

Crude Tanker Spot Rates (WS)

Clean Products

East

MRs in the AG have seen a resurgence in activity and levels this week driven mostly by a trimmed list to start the week. Off market inquiry and fixing during IE week combined with tight availability in the natural window has seen WS222.5 on subs TC17 / WS160 for TC12 and West numbers just shy of $2.3m. For now, the market feels steady although a quiet end to the week may serve to soften sentiment slightly as mid-March dates come into play.

LR2s close the week with a very tight front end. Open spec TC1 ships should expect to see last done level being retested. Assess 75 x WS127.5 as the stepping stone. West runs dipped; however, they look set to recover quickly to the $3.3-3.4m level (date dependent). LR1s sat similar, tight off the front end for Nap and Jet suitable ships, and as such owners looking to push. Charterers have controlled the flow of stems yet the reset has not been tested. TC5 at 55 x WS140-142.5 levels and UKC at $2.75m mark.

UK Continent

With IE week passing it was no shock to see cargoes kept on the quiet side for MRs, with limited market quoting and tonnage being slowly clipped away. Tonnage hasn’t been plentiful which has kept rates relatively placid with 37 x WS155 the call for TC2 and WAF holding a 20-25 point premium. Off prompt dates we could still see charterers struggle for coverage but once we move past the 7-8 sort of window, we anticipate more options to be available. Monday morning will be interesting to see if we get a rush of enquiries leftover from this week, but if not, charterers should be able to wrestle back some control on rates once again. 

Supply has been limited on the front end of the Handy tonnage list throughout the week but thankfully for charterers and with IE week in full swing there hasn’t been much fixing action bubbling to the market surface. TC23 closes around the 30 x WS200-202.5 mark but MRs are also in play for short-haul business which should act as a cap for the 30kt fixing levels.

Med 

A tough week for the Handies in the Mediterranean has passed with limited enquiry facing off a well-stocked tonnage list causing a crumble in rates. 30 x WS200 has quickly slipped down to 30 x WS150 now for XMed as charterers comfortably cover stems with owners in hope of a floor being found soon. Cargo enquiry early next week will be key to how soon this floor may be hit. 

Finally, to the MRs down south, and owners have been able to enjoy more limited options for charterers with few ballasters around keeping rates buoyant in comparison to the UKC. TA is seen around the 37 x WS170-175 mark and with a list that doesn’t seem to let charterers off the hook too soon, we can expect this premium to hang around for the foreseeable.

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

A quiet week for Handies in the North as MR activity stole the limelight. Very little enquiry for this sector has left units free to work at the top of the list. As usual, it won’t take much before the list looks leaner however, one concern for owners will be how many handy stems have been lost to support cargoes up to 45kt. Despite this, levels hold at 30 x WS 165 for now and looking ahead to next week we expect a handful of units to open over the weekend leaving tonnage prompt and FOC needing a strong start to clear these units before levels can start to slide.

It’s been another strong week for Med Handies with enquiry continuing to pour into a tight list early into the week where any replenishment was quickly picked off. A replacement for a late runner caused rates to jump to 30 x WS220 early on before a couple of premium ports were covered with eye-catching numbers with 30 x WS240 fixed for a Taranto-Med run. Vanilla XMeds still remain at last done levels of 30 x WS235 and this is where we expect levels to hold for now. The end of IE week saw a slowdown in activity which has allowed some well-approved units to relieve pressure on charterers for now.

MR

The North saw plenty of activity for MR owners to be excited about as levels rose on the back of continued enquiry. We started the week with a few usual Med players opening early into the week, but this concern for owners was quickly put to rest as enquiry flowed and levels firmed from 45 x WS110 XUKC to 45 x WS120 XUKC by week’s end. Looking ahead to next week, we expect the list to remain tight and levels to hold although some units are set to open end first decade.

Not the week that MR owners would have hoped for in the Med as we have seen little by way of full-stem enquiry and the opportunity for owners to kick levels on. A shining light is that we expect replenishment to remain in owner’s favour as voyages down from the North could arrive/open just past the natural window keeping workable tonnage tighter than usual. Looking to next week we assess current MR levels to be between the 45 x WS140-145 mark.

Panamax

Panamaxes again have seen little activity this side of the pond but Panamax owners in the USG/Caribs will be pleased as levels begin to tick upwards off the back of a tighter-looking list and local Afra markets firming which has positively trickled down to the Panamaxes where levels currency reside at the 50 x WS125 mark.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

Clean and Dirty Tanker Spot Market Developments – Spot WS and $/day TCE (a)

wk on wk changeFeb 27thFeb 20thLast Month*FFA Q4
TD3C VLCC AG-China WS-758656860
TD3C VLCC AG-China TCE $/day-6,75039,25046,00049,00037,750
TD20 Suezmax WAF-UKC WS-785929484
TD20 Suezmax WAF-UKC TCE $/day-4,00030,50034,50035,50027,750
TD25 Aframax USG-UKC WS10157146133139
TD25 Aframax USG-UKC TCE $/day4,25037,75033,50027,75026,750
TC1 LR2 AG-Japan WS-1121122102 
TC1 LR2 AG-Japan TCE $/day75026,00025,25018,250
TC18 MR USG-Brazil WS-16144160162169
TC18 MR USG-Brazil TCE $/day-2,75014,25017,00017,25017,000
TC5 LR1 AG-Japan WS3140137121136
TC5 LR1 AG-Japan TCE $/day1,50021,25019,75015,25018,250
TC7 MR Singapore-EC Aus WS-16186202171178
TC7 MR Singapore-EC Aus TCE $/day-2,25020,00022,25016,50017,750

(a) based on round voyage economics at ‘market’ speed, eco, non-scrubber basis

Bunker Prices ($/tonne)

wk on wk changeFeb 27thFeb 20thLast Month*
Rotterdam VLSFO  -16520536539
Fujairah VLSFO  -31530561558
Singapore VLSFO  -41527568567
Rotterdam LSMGO  -26646672652

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