WAF Suezmax market surges amid support from USG, tighter tonnage list

The West African Suezmax market saw a drastic increase in freight rates and activity levels on the day April 10, with shipbroker sources pointing to a firming US Gulf-UK/Continent route, a rush to fix cargoes for late-April laycans and a shorter supply of vessels in position to meet these dates.

Nine Suezmax fixtures were reported for loading in the WAF region on April 10, marking a substantial increase in activity levels from a relatively slow period in recent weeks.

Rates firmed throughout the day, jumping from w115 for a Nigeria-Spain voyage reported in the morning to w125 for a Kribi-UKC/Mediterranean run heard just before the Platts Market on Close cut-off point.

Platts, part of S&P Global Commodity Insights, assessed freight on the 130,000 mt WAF-UKC route, exclusive of EU Emissions Trading Scheme charges, at $20.30/mt on April 10, up from $17.81/mt the previous day.

Market sources attributed the spike in rates for WAF-loading voyages to a lack of tonnage to meet current levels of cargo demand and support from a strengthening US Gulf market.

"The US Gulf market is booming, and the list is tightening," a Suezmax broker said.

"The market's on fire -- it's a great time to be an owner," a second Suezmax broker said, with a third broker saying "the list is looking tighter by the minute."

Rise in reported fixtures

Market sources offered differing explanations for the surge in fixtures.

"There's an end-of month rush -- fewer VLCC [cargoes] got covered, so [charterers] have to take Suezmaxes," a fourth Suezmax broker said.

Three of the WAF Suezmax fixtures reported on the day had discharge destinations in Southeast Asia or the Far East -- zones which are traditionally recipients of VLCC shipments.

However, the third broker disagreed with this view, arguing that although more fixtures were being reported, this did not necessarily mean that overall export volumes were higher.

"The [WAF] market's moved a lot because of the US Gulf, so it's not that there's a bunch more cargoes, it's just the information is actually getting out because people are making more noise with their cargoes," the third broker said. "In flat markets, like we've had for the last three weeks, info doesn't really get out and people fix off market privately."

Firming US market

Out of the Americas region, amid a tight position list, freight for an Aframax carrying crude oil from the US Gulf Coast to the UK Continent jumped to $48.67/mt on April 10, excluding EU ETS costs, a $7.44/mt increase day on day.

This large increase in freight bolstered sentiment for Suezmax owners as well, which was evident in two trades being done at the w105 level, both inclusive of EU ETS costs. While Aframaxes remain the more expensive option compared to Suezmaxes, sources indicated that the jump in midsize tanker freight coupled with the availability of VLCCs in the US Gulf as well as Venezuela, could see preference shift to the larger ships.

"[Suezmax rates] are probably going to top out with a few VLCCs on subs," one shipowner said. "I hear a couple of VLCCs [are] on subjects for USGC loads -- likely taking chunks out of Aframax and Suezmax third decade April volume."