Fearnleys, Clarkson Research Services and several other brokers have reported negative timecharter equivalent (TCE) for the Worldscale (WS) spot rates being offered for Suezmax and Aframax tankers
“2021 has kicked off with a whisper,” reports shipbroker Fearnleys, “for the first time in years we have seen fixtures concluded yielding negative returns.”
Clarkson Research Services (CRS) concurs. On the Suezmax tanker Middle East Gulf-Mediterranean route, CRS reports the spot rate on offer was WS14, a TCE of minus US$6,300 per day. So far in 2021, this route has an average TCE of minus US$8,300 per day.
In the Aframax tanker sector, the Med-Med route TCEs are being calculated at minus US$2,500 per day and a 2021 average so far of minus US$1,000 per day.
This implies that tanker operators are paying charterers to carry cargo, but actual fixtures at these spot rates are rare, according to a discussion about the negative TCE rates on business social media website LinkedIn. One tanker operator suggested the reason for fixing at a negative rate would be to cover some costs of repositioning the tanker into an area/basin where rates were firmer.
CRS also noted that one Suezmax cargo had been fixed to a VLCC. With weak rates in the VLCC sector, this could herald the start of VLCCs poaching Suezmax trade.
The downturn in the spot rates and the negative implications from the TCE calculations were not reflected in the timecharter market. Suexmax rates remained at around
US$16,500 per day and Aframax rates at US$15,250 per day for one-year timecharters.
There was some good news for tanker tonne-mile demand. Shipbroker Gibson report that Brazil is reaching new highs of crude oil exports. Exports reached 1.4M b/d in 2020, and Petrobras has announced plans to double its exports between 2021 and 2025 from 445,000 b/d to 891,000 b/d.
In another move to boost exports, Gibson reports that Brazil plans to sell half its 2.2M b/d refinery capacity to foreign operators. The assumption is that foreign operators will purchase foreign crude oil to process, freeing up more domestic crude oil for export.
The increase in Brazilian crude oil exports from the salt dome complex in the Atlantic is good news for shuttle tanker operators like AET, which have provided the link between offshore production and the export market.
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