Smaller Tanker Rates Take A Pounding

Rates for Aframax tankers (70-80,000 tons) took a pounding this week, most notably in the Caribbean market, but elsewhere markets remained flat, brokers said. U.S. brokers said Orion's fixture of the 70,000-ton Astro Sirius from the East Coast of Mexico to the U.S. Gulf demonstrated the extent of the slump in the Caribbean market, which lost almost two months of gains to land at W215 on Friday. Last week, Oslo broker Fearnleys noted that the North Sea market was "primed for a beating" after several days of total silence. Rates fell 50 points last week and a further 20 points this week to below W180. Fixture lists showed the North Sea market being hit by an invasion of million-barrel tankers towards the end of the week. Thirteen fixtures were reported on Thursday and Friday, compared to eight in the whole of last week, and brokers said this would not help the 80,000 tonrs that usually ply North Sea trades. Mediterranean trades for 80,000 tonrs remained strong at around W255, but the Asian trade reflected the generally poor trend for smaller tankers. "The Far East Aframax market showed an all round softening and rates for modern tonnage to Far Eastern destinations slipped to around W210," said London tanker broker Gibsons. Brokers' graphs this week showed that freight from the Mideast Gulf in all directions had more or less flat-lined. Westbound VLCC freight remained static at W88, while eastbound routes to Japan fell a mere one point to W103 for 250,00 ton cargoes to Japan. Brokers predictions of last week that transatlantic VLCC freight from West Africa would be dragged down by the million-barrel market proved correct. Million barrel freight from Nigeria to the U.S. failed to recover from last week's hammering, as illustrated by a Koch fixture to the U.S. Gulf at W115. Given the cheap million-barrel option for shifting crude across the Atlantic, few charterers were booking VLCCs, and freight dropped 12 points to just above W100. Fearnleys did not expect the situation to improve. "Even though VLCC rates are weakening, it is expected that more fixtures will be concluded on Suezmaxes (million-barrel tankers)," it said. - (Reuters)