Freight rates for deliveries between the Mediterranean and Northwest Europe jumped to their highest level in three months Wednesday, buoyed by rising activity in the Mediterranean, which saw the S&P Global Platts FOB jet assessment hit $483.75/mt, its highest level since September 2015.
A significant uptick in interest for product vessels in the Mediterranean has impacted freight rates in the Mediterranean and Black Sea recently, with the Med-UKC freight rate jumping by nearly 24% in the past 20 days.
According to S&P Global Platts data, freights rates on the cross-Med route, basis 30,000 mt, rose steeply by 63 cents to be assessed at $5.99/mt Wednesday, which was the highest since July 11, when the rate was at $6.24/mt. Reflecting firmer sentiment on the cross-Med route, freight on the Med-Northwest Europe route, basis 30,000 mt, rose by $1.32/mt to $13.72/mt, same level as seen July 22.
Typically, freight rates on the Med-NWE route mirror the sentiment on the cross-Med voyage. Generally, there is a Worldscale 10 premium on the rate for the Med-NWE route compared with the cross-Med trip.
“The market is picking up; I have about nine cargoes being shown to me including the Black Sea and Med region….The tonnage is thinner for normal loading window starting from [Oct] 27. Nonetheless, I am not still happy with these rates. Why? Because our daily earnings are still in negative,” a Mediterranean shipowner said.
The impact was being felt strongly by jet traders in the Mediterranean and is expected to limit already low activity levels.
“No ‘indigenous’ supply on 30kt naturally size, only arb MRs and LRs which are now even more expensive in HiFOBMed+ premium terms, increasing distance in price between buyers and sellers,” one source said, referring to the pricing mechanisms often employed by Mediterranean jet traders.
Another source disagreed, however, saying a wider Med/NWE margin would encourage movement of barrels. On Wednesday, Platts assessed the margin at $14.50/mt from $13.25/mt the previous day.
“Med very quiet but not been helped by the narrow Med/NWE diff. Now might loosen things up a bit,” the source said.