Suezmax rates in Med spike on support from USGC, West Africa

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Suezmax dirty tanker freight rates for deliveries on routes across the Mediterranean have spiked over the past week, in line with big rises in the US Gulf Coast region and West African markets, with the near-term prospects for the Suezmax sector remaining steady to bullish, trading sources said.

Platts, part of S&P Global Commodity Insights, assessed wet freight on the 130,000 mt Caspian Petroleum Consortium Terminal to Mediterranean route at Worldscale 125 on Oct. 17, up w52.5 from its rate of w72.5 a week earlier on Oct. 10.

Platts also assessed freight on the 130,000 mt Mediterranean to Mediterranean route at w125 on Oct. 17, up w55 from its rate of w70 a week earlier.

The rises in the Suezmax CPC-Med and Med-Med markets have been driven by higher rates being fixed in WAF, which is pulling vessels westward and therefore creating a tonnage crunch in the Mediterranean and Black Sea, a Europe-based shipbroker said.

“No one’s going to restrict themselves to a shorthaul voyage when the demand for tonnage is the way it is in WAF, so I think [Med-Med voyages] will come with a premium,” a UK-based Suezmax broker said.

The same broker also pointed to a firming Med-Med Aframax market as a reason for why Med-Med Suezmax sentiment has strengthened so much over the past week.

Platts assessed freight on the 80,000 mt Ceyhan-Med route at w215 on Oct. 17, nearly double its rate of w110 a week earlier.

Opaque market

Unlike in the West Africa to UK-Continent Suezmax market, whose recent rise was sparked by the announcement of a fixture agreed at w107.5 — some 30 points higher than last-done levels — on Oct. 11, no fresh fixtures have been reported for either the CPC-Med or Med-Med route since the Suezmax market began to spike.

Trading sources have stressed that this makes it difficult to gauge exactly where rates stand.

The same UK-based Suezmax broker said that “it is a nightmare to read this [the Med-Med Suezmax] market on a good day”, referring to it as being “very opaque.”

“The cross-Med market is always the toughest to call, but I think Aframaxes and Suezmaxes have stabilised — at least for now,” a Europe-based shipbroker said.

An additional difficulty when trying to determine the rate for the Med-Med Suezmax market is the large number of possible loading and discharge ports, sources added.

A shorter Med-Med run, such as from Arzew (Algeria) to Foz (southern France) would tend to be fixed at a w20 premium to a longer run, such as from Ceyhan (Turkey) to a port in the western Mediterranean, or from Algeria to the eastern Mediterranean, according to sources.

Source: Platts

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