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Firm demand lifts Mideast Gulf Suezmax rates

Mideast Gulf

Singapore, 26 September (Argus) — Suezmax rates from the Mideast Gulf have reached a record high, following firm demand to east Asia and to India and higher very large crude carrier (VLCC) freight rates.

Freight rates for Suezmax shipments from the Mideast Gulf to east Asia and to the west coast of India rose by 11.1pc and 22.2pc to WS145 and WS165, respectively, on 23 September, from WS130 and WS135 on 9 September. These marked the highest levels since June 2021 when Argus launched the assessment.

Suezmax shipments from the Mideast Gulf to east Asia jumped by 1.34mn t on the month to 2.83mn t in September, of which 44.6pc were imported by China, and 24.6pc by Singapore, according to preliminary vessel arrival data from oil analytics firm Vortexa. But export trends from the Mideast Gulf flipped compared with the 12-month average, where 40pc of volumes previously flowed to Singapore, and 22pc to China.

Increased demand into India supported freight rates, with imports rising by 1.66mn t to 3.44mn t in September, according to data from Vortexa.

Suezmax rates have also been supported by high VLCC rates. Resurgent demand for Asia-bound crude cargoes from the Mideast Gulf, west Africa, and the US Gulf coast, in addition to rising demand for shipments to Europe to replace lost Russian barrels, has “stretched out tonnage”, according to one shipbroker.

VLCC freight rates remain the cheapest in the shipping space because of economies of scale, but earnings for the 319,000 deadweight tonne (dwt) vessel were the highest on the Mideast Gulf to China route at $72,638/d, compared to $47,882/d for a Suezmax vessel.

Between a 158,000 dwt Suezmax and a 115,000 dwt Aframax, time charter equivalent (TCE) rates for a Suezmax vessel from the Mideast Gulf to Singapore was at $44,233/d, compared to $39,947/d for an Aframax. But TCE rates for Suezmax vessels have been lagging behind in earnings since 3 August, and have only recently overtaken Aframax earnings on 21 September.

Rates should hold as fundamentals have been relatively stable, as vessel availabilities have been kept in check by continued fixtures into India, and following several off-market deals done directly between charterers and shipowners.

But some of these direct fixtures could have been concluded at lower levels, participants said, as bunker prices have been trending down since the end of August, so some shipowners may be convinced to take up shipments at lower rates privately. The price for very-low sulphur fuel oil with 0.5pc sulphur content in Singapore fell to $677.50/t on 23 September, from $771.60/t since 30 August.

Mideast Gulf to Singapore Suezmax, Aframax TCE rates and Singapore VLSFO bunker prices ($/d, $/t)
Mideast Gulf to east Asia and to west coast of India Suezmax rates (WS)
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