Long Range Clean Tanker Rates Rally To Over 2-Month High

Published Mar 11, 2013 2:40 PM by The Maritime Executive

LONDON - Clean tanker rates for refined petroleum products on top export routes were firmer on Monday helped by firmer activity with the Long Range tanker market seeing earnings shoot up to their in over two months.

Long Range 1 tankers, carrying 55,000 tonne loads from the Middle East Gulf (MEG) to Japan, were at W124.54 or $14,441 a day on Monday. Last week and at their highest since Jan 3.

That compared with W121.04 or $13,186 a day on Friday and W117.96 or $11,978 a day last Monday.

"A scarcity of LR1 tonnage in the MEG has allowed bullish owners to continue the rally in rates for both east and westbound voyages," broker SSY said.

Late last year the volume of LR1 fixtures jumped to their highest in years, helped by healthy naphtha and jet fuel bookings to Asia, sending earnings to their highest since early October 2009.

Larger Long Range 2 or LR2, 75,000 tonne shipments on the Middle East Gulf to Japan route were at W90.91 or $10,459 a day, their highest since Jan 8. That compared with W90.23 or $10,153 a day on Friday and W88.32 or $9,154 a day last Monday.

"LR2s have seen cargoes fixed steadily but it is taking time for the heat on LR1s to filer through," broker E.A. Gibson said.

Rates for medium-range (MR) tankers for 37,000 tonne cargoes from Rotterdam to New York were at W150.63, or $14,888 a day when translated into average earnings.

That compared with W152.29 or $15,266 a day on Friday and W148.96 or $14,574 a day last Monday. Last this month average earnings reached their highest since late 2011.

"Sustained activity ... should see rates hold around present levels with some potential for further modest gains," broker CR Weber said.

In recent weeks a pick up in demand for cargoes, helped by a gasoline arbitrage window, drove gains before the rally lost steam.

In April last year, rates reached their highest since 2008 on a jump in U.S. gasoline demand, helping to reduce the number of tankers available for hire. Since then, average earnings have remained volatile.

Analysts said reduced refinery capacity in the Atlantic Basin could boost long-haul demand for the wider products tanker sector in coming years, helped by the delivery of fewer tankers.

Reporting by Jonathan Saul, editing by William Hardy (c) Thompson Reuters