Freight
Market Overview
VLCC freight rates continue to soar as TD3c Middle East to China route printing WS600 equivalent to 17.7$/bbl basis loading from Ras Tanura.
Reduced VLCC availability as more tankers get locked up with longer voyages, both due to diversion from chokepoints, and more Atlantic basin arbs into Asia, while increasing crude supply from the AG fuel the TD3c rally.
CPP vessels have repositioned en masse from the AG which should drive spot rates higher when the AG barrels return.
As dirty Aframax earnings soften, LR2 vessels clean back up and eventually cap LR rates.
However, the window between initial clean up and normalisation is likely several months, and in this window, spread between TD25 and TC5 paper could widen dramatically.
More refined products are expected to be exported out of the Far East as they are again supplier of choice into Australia and New Zealand.
Expect tonnage to be tight in the front and gradually ease as ships reposition out of the Atlantic and countries restocking on products, supporting spot rates in the near-term.
This would be followed by rate weakness as market dynamics normalise and fleet repositions.
