Contents
Table of Contents
Turkish Delight?
After just over a year of being offline, discussions about restarting the 450 kbd KRG pipeline remains at an impasse. Despite months of negotiations since March 2023, insufficient progress has been made to restart flows from Northern Iraq to the Turkish port of Ceyhan. Political tension between the Federal Iraqi Government, the autonomous Kurdistan Regional Government (KRG) and Turkey have blocked previous attempts at finding a resolution. For the tanker market, particularly the Aframax sector, this resulted in the loss of approximately 400 kbd of exports out of Ceyhan, reducing the supply of crude cargoes in the Mediterranean, forcing owners to look for other opportunities.
Therefore, the news this week that the Iraqi government will go ahead with repairing and reopening the separate 350 kbd Kirkuk-Ceyhan pipeline comes as welcome news. The 960km pipeline had been out of action since 2014 after repeated attacks by ISIS. Nevertheless, government officials are indicating the pipeline will probably be ready to restart operations by the end of April, once work on the storage and pumping facilities are completed. However, this start date is quite ambitious and likely to be pushed back later into Q2.
In terms of what this means for restarting the KRG pipeline, this development is likely to add further difficulty to the current dispute. The KRG will not be satisfied with Iraq being able to export its crude into the Mediterranean while cutting the KRG off from the revenue this generates to finance its various commitments. This is likely to stall reopening the KRG pipeline beyond this year and entrench existing positions unless one side makes concessions which again appears unlikely at present.
For the Mediterranean refining sector, fresh light and medium sour Iraqi grades are likely to be well received given both the ongoing absence of Urals and eliminating the need to go via the Cape of Good Hope to avoid the Red Sea. This should provide some support to the Mediterranean middle distillates complex.
It is also worth noting that given current OPEC product quotas, if Iraq is to start exporting via its North bound pipelines into the Mediterranean, they may have to reduce exports from its Southern ports. In such scenario, this would be bearish for the AG tanker market, especially in the Suezmax sector.
Although, the resumption of Northern exports should be good news for the Mediterranean Aframax sector, the gains could be capped. While in in theory this should support cross-Mediterranean rates. The biggest unknown is likely to come from Aframaxes engaged in Russian trade. Urals continue to trade above the $60 G7 price cap and increasing sanctions enforcement is forcing some players to exit this trade and seek other opportunities. An additional, 350 kbd of non-sanctioned Iraqi crude is unlikely to be sufficient to offset rising vessel availability in the region if enough tonnage leaves the Russian market.
Ceyhan Crude Exports (kbd)
Crude Oil
Middle East
VLCC rates in the AG mainly traded sideways, there has been plenty of fixtures done privately in off market deals but rates remained steady with a touch of softness as owners are resistant. Heading into next week, the position list remains balanced however with the Atlantic improving it could lead to more ships committing to the ballast. Today we are calling 270,000mt Ag/China run at ws 64 and 280,000mt AG/USG is now at ws 41 level
The list in the AG for Suezmaxes remains rather lengthy but with a stronger West Africa market we will likely see more start to ballast on spec. TD23 remains steady at around 140,000mt x ws 65 via the Cape. To head East, the market is still steady at ws 112.5.
West Africa
The week started off quietly for the VlCC’s in WAF. However, as we progressed through the week Charterers began to move on stems. Owners remain firm in fixing ideas and it is expected that the next done rate will be higher than last done. In today’s market we are expecting a WAF/China run to fix at the ws 66 level
Suezmax markets in West Africa have been fiery this week and rates have pushed up substantially. There is a feeling in the air that this market may have reached a local top. for TD20 we estimate this today at 130,000mt x ws 127.5.
Mediterranean
TD6 has remained somewhat steady as we haven’t seen quite the level of enquiry to see rates really push up. Though the Eastern Med is short on ships. We estimate CPC/Med today at 135,000mt x ws 127.5. Rates to head East have firmed moderately to around $5.3M for Libya/Ningbo via the Cape.
Aframax confidence grew steadily here this week, bolstered through a combination of an uptick in enquiry and US markets rallying. Very high numbers were concluded for undesirable shorter voyages at 80,000mt x ws 242.5 but this sentiment did also spread to more vanilla runs which crept into the ws 200 range. Reprieve did eventually arrive for Charterers though when Suezmaxes came into play, as most owners are constantly monitoring the performance of the Afras. As we approach the close it seems rates have steadied with a 10 point drop on USG/TA knocking some confidence for short term market strength.
US Gulf/Latin America
The VLCC market in the USG has sprung into life with Charterers moving on cargos for mid may dates. Rates have definitely bottomed and are now pushing back up, edging closer to the $9M mark. Brazil exports, on the other hand has not been as active this week. However, levels remain steady due to the activity in the surrounding regions. Today we expect a USG/China run will fix in the region of $8.7M while we estimate a Brazil/China run is paying around ws 64 level.
North Sea
The North Sea market proved to be an enigma once more as surrounding markets rallied significantly but left this one behind. The usual suspects such as shuttle tankers and owners unwilling to ballast to the states prevented rates from firming for the majority of the week with ws 130-135 levels being concluded in all cases. By the close ws 137.5 was achieved but once the obvious candidates are exhausted there could be more on the table. For now however the balance seems to be there.
Crude Tanker Spot Rates (WS)
Clean Products
East
LRs have had another difficult week with rates continuing their sharp decline. But brighter times loom on the horizon with Owners starting to see more optimism and push for better rates. TC1 bottomed at ws 160 this week but with TC5 still well above there is room to see this rise fairly quickly. Owners now are looking for minimum ws 175. A 90,000 mt Jet AG/UKC run also hit a low at $4.90M, but already rates look to be back over the $5.0M level. Its likely we will see $5.25M established into the new week. With the Middle East market on holiday the last few days next week are expected to start actively and could see a sustained move on all routes.
LR1s have been more stable generally but Westbound runs dropped unnecessarily mid week with the first counter being taken. 65,000 mt Jet AG/UKC hit $3.75M accordingly but would be tough to repeat. Most would assess this at $4.0M ahead of the coming week. TC5 has held up around ws 200 with Owners being happy to wait for the LR2s to catch up and make this viable. Overall all eyes now move towards the opening of markets after the Eid holiday and a general uplift is expected.
It was a somewhat disjointed week on the MRs East of Suez where various public holidays have caused an inevitable slow down in cargo flow and fixing to take place largely off market. As such, rates have come under pressure with Westbound runs dropping below $3M, TC17 is down to ws 280 and there are rumours of sub ws 270 on subs for a straight SAFR run. However, as the week draws to a close the top of the list has been kept ticking over with well approved tonnage looking tighter and some owners in ballast choosing to sit back in expectation that levels bounce next week.
Mediterranean
It’s been a tough week for handy Owners in the Med with rates coming under pressure from the off. We began the week with XMED trading at the 30 x ws245 mark but with Monday’s list looking well-supplied rates soon started to tumble and at the time of writing we see 30 x ws190 being repeated. After this ws55 point drop however we do seem to have now hit the bottom with a handful of fresh cargoes to cover and the list improving . BSea/Med is in need of a fresh test after the slide on XMED with a ws30-40 point premium expected. Bottomed into the weekend.
In Med MR market, rates have remained steady for the most part of the week. The call for Med/TA was 37 x ws210 on Monday and it stayed that way until Thursday due to a good level of activity and a list which lacked non-Russian players. At the time of writing, rates slipped ws5 points with WAF tracking at +ws15 points. A steady finish expected here.
UK Continent
It has been a positive week for Handy owners in the North. The tonnage list has been lacking supply especially for non-Russian units which has enabled Owners to push freight. 30 x ws232.5 (XUKC) is now on subs and it will be interesting to see how many stems will be quoted in the 20-25 window next week. Owners quietly confident here.
A bit of a stutter at the start of the week saw rates slip rather rapidly down to the 37 x ws180 mark for TC2, but thankfully for the Owning fraternity that was about as far as it went. Tonnage continued to be clipped away at these levels for the majority of the week as we also saw the premium for WAF chiseled away back down to the ws20 point mark. A late in the day 37 x ws185 is seen for TA and with a good number of ships on subs at the top of our lists, we could start to feel a bounceback is on the cards. Fresh enquiry and restocking of our list on Monday will be crucial for how this plays out.
Clean Tanker Spot Rates (WS)
Dirty Products
Handy
This past week has seen activity escalate across the UKC and the Med regions. In the North, top of the list units continued to find employment this week, keeping their idle days to a minimum. Repeating ws 235 has now steadied the ship. Expect the same level to hold should enquiries continue to flow early next week.
Activity in the Med this week has been thick and fast. A clear out in the Med has been welcomed with open arms, and despite Owners not yet being able to surpass last done, the amount of activity seen this week should keep levels holding at ws 175 for now as we now look towards next week.
MR
It was a familiar story as full stem enquiry got off to a sluggish start in the North with MR owners continuing to find employment through part cargoes. The long awaited test for a 45kt stem arrived, which resulted in 45,000kt x175 for X-UKC. Despite one Owner finding a 45kt stem this week, expect levels to remain steady as part cargo opportunity has kept MR units ticking over for now.
Similar to the North, one Owner fixed 45,000mt x ws 155 for X-Med. For now, at least, owners are finding most of their employment via part cargo stems, which has provided a great time filler while they await full stem enquiries to continue flowing.
Panamax
Tonnage remains thin in Europe as enquiry has yet to emerge, leaving this sector again needing a fresh test to determine current market levels. The State’s market has seen little movement this week as tonnage supply and rate of enquiry have been going hand in hand, keeping this sector steady for now.
Dirty Product Tanker Spot Rates (WS)
Rates & Bunkers
Clean and Dirty Tanker Spot Market Developments – Spot WS and $/day TCE (a)
| wk on wk change | Apr 11th | Apr 4th | Last Month* | FFA Q2 | |
| TD3C VLCC AG-China WS | -3 | 62 | 65 | 72 | 66 |
| TD3C VLCC AG-China TCE $/day | -4,500 | 32,500 | 37,000 | 45,000 | 38,000 |
| TD20 Suezmax WAF-UKC WS | +23 | 129 | 106 | 105 | 113 |
| TD20 Suezmax WAF-UKC TCE $/day | +14,000 | 49,000 | 35,000 | 35,000 | 39,500 |
| TD25 Aframax USG-UKC WS | +48 | 224 | 176 | 149 | 195 |
| TD25 Aframax USG-UKC TCE $/day | +18,000 | 55,250 | 37,250 | 27,750 | 44,500 |
| TC1 LR2 AG-Japan WS | -32 | 162 | 194 | 314 | |
| TC1 LR2 AG-Japan TCE $/day | -11,500 | 32,000 | 43,500 | 86,750 | |
| TC18 MR USG-Brazil WS | -16 | 279 | 295 | 277 | 245 |
| TC18 MR USG-Brazil TCE $/day | -2,250 | 35,250 | 37,500 | 34,250 | 28,500 |
| TC5 LR1 AG-Japan WS | -44 | 189 | 233 | 312 | 218 |
| TC5 LR1 AG-Japan TCE $/day | -11,500 | 28,250 | 39,750 | 60,750 | 36,000 |
| TC7 MR Singapore-EC Aus WS | -8 | 285 | 293 | 315 | 273 |
| TC7 MR Singapore-EC Aus TCE $/day | -1,500 | 32,000 | 33,500 | 37,500 | 30,000 |
(a) based on round voyage economics at ‘market’ speed, non eco, non scrubber basis
Bunker Prices ($/tonne)
| wk on wk change | Apr 11th | Apr 4th | Last Month* | |
| Rotterdam VLSFO | +3 | 611 | 608 | 595 |
| Fujairah VLSFO | +1 | 645 | 644 | 635 |
| Singapore VLSFO | +2 | 646 | 644 | 638 |
| Rotterdam LSMGO | -10 | 791 | 801 | 784 |
