Higher Aframax freight rates in Persian Gulf prompt ships to ballast to region


Aframaxes plying on the East of Suez routes are ballasting to the Persian Gulf from Southeast Asia to take advantage of the sharp rise in rates in the region, market participants said Monday.

At least three ships, the Calida, the Lotus and the Vermillion Energy, plan to or have recently ballasted from east Asia to the Persian Gulf, market participants who track the developments said.

The tight availability of ships in the Persian Gulf pushed up the rates sharply this month.

The worldscale rates for the route from the Persian Gulf to East hit the lowest level so far for this year at w83 on October 2.

The rates have subsequently bounced back and were assessed by Platts at w105 on Friday.

This has translated into higher earnings for longer voyages, prompting some of the ships to ballast to the Persian Gulf.

“Ships are ballasting to the [Persian Gulf] region and there is still tightness of supply there,” a source with an Aframax owner said.

Some of these ships may take cargoes for India as demand for delivery there was high, an Aframax broker in Singapore said.

On the Persian Gulf-to-East route, an owner can earn close to $24/mt compared with less than $14.50/mt on the Indonesia-Japan route, according to calculations based on latest Platts data.

Brokers also point out that the Persian Gulf-to-East runs guarantee the owners higher earnings for a longer duration.

Based on a 12.5 knots speed, a voyage from Singapore to Chiba will last around 9.66 days compared with 19.52 days for a Shuaiba-Zhouzhan trip.

The bullish outlook for the rates during the upcoming winter season is also prompting ships to ballast to the Persian Gulf.

“If ships ballasted to [the Persian Gulf] and took a cargo around November 12 to Singapore, the next cargo they look at would be for loading in end November,” another Aframax broker in Singapore said. By then the market will be firmer, he added.

Other owners are guided by relatively ample supply of ships in Indonesia and inability to meet schedules this month due to the adverse weather.

Aframax rates have generally been moving higher for the last two weeks due to concerns that recent storms and typhoons in Asia would have delayed ships and demand for replacement tonnage that may continue to come up over the next several days.

One ship failed to meet the schedule for October 25 loading in Dumai and ballasted to the Persian Gulf.

Another ship, the Capricorn Sun, timed its ballast to arrive in Kuwait by the end of October, brokers said. It was taken by Shell at w110 for a voyage to New Zealand after two ships failed to meet the deadline, the sources said.

Lower bunker prices have also made owners more amenable to a ballast voyage.

For the same reason, however, charterers are seeking a discount in rates.

“There is a stand-off between charterers and owners,” one of the brokers said.

November is typically the busiest month and with stems coming out, owners are keeping the rates up as much as possible, he added.

Higher freight rates in the Persian Gulf have also had some spillover effect in Indonesia.

The key Indonesia-Japan route was assessed at w93 Friday, up from a low of w81.50 on October 7.

Source from : Platts