Freight rates for clean product tankers out of the US Gulf Coast are declining steadily after rates shot to 2012 highs last week, on the back of decreased activity, sources said Wednesday.

Sources said that a lot of fixtures were seen in the last two weeks, as Hurricane Sandy prompted a lot of USGC refiners to use their stockpiles and send cargoes to Europe and Brazil, but this trend had more or less stopped now.

Sources said that after these highs, activity slowed suddenly leading to a glut of tonnage.

USGC to Northwest Europe freight rates were pegged at Worldscale 125 on Wednesday afternoon, which is a fall of 40 points compared to last Wednesday when rates were at a 2012 high of w165, Platts data shows.

Activity on the Caribbean to US Atlantic Coast routes also remained limited and rates on this voyage were stable at w180.

"There are a handful of ships on subs our side but rates have softened down to around w125 for USGC-NWE and Caribs-USAC remains untested," said a shipbroker.

"We just heard a ship is on subs at w125 but haven't got the details yet," he added.

Sources said the FPMC 25 was on subs at rates ranging from w120-w125 though more details could not be confirmed.

Some sources however said that despite fewer cargoes, there were signs that activity could pick up by the end of the week.

"Since yesterday there has been lots of activity with about 15 ships put on subs yesterday," said a shipowner. "But the USGC-UKC rate did however fall to w120-w125 levels, which was expected and usually happens when you have had one week without activity and then the tonnage lists expand and suddenly you see lots of activity again. If activity continues, [the] market should go up."

Source: Platts