Asian Aframax rates break w100 on uptrend as demand for moving fuel oil spikes

Time:2013-12-12 Browse:51 Author:RISINGSUN
The Asian Aframax spot market started on an uptrend this week, following increased demand for moving fuel oil cargoes on key routes out of the Persian Gulf and Southeast Asia and shortage of available tonnage, sources said Wednesday.


The key Persian Gulf to East worldscale rate for moving 80,000-mt heavy distillate and crude cargoes breached the key Worldscale 100 mark for the first time this year Monday and was assessed unchanged at w110 Tuesday. This route was last assessed at the w100 mark on October 10, 2012.


The key Southeast Asia route -- Indonesia to Japan -- also breached the key w100 mark for the first time Monday, and was assessed up w2 at w107 basis 80,000-mt cargoes Tuesday. This route was last assessed at the w100 mark on October 8, 2012.


Shipping sources attributed the uptrend to increased demand and lack of enough tonnage to meet that demand.


"There are still ships doing fuel storage in Singapore. [There are] more fuel imports into China. Fewer fuel oil [laden] ships are coming into [the East of Suez market] from Europe," said a Singapore-based charterer.


During the second quarter of this year, many Aframax owners were lured to the Long Range II clean products tanker market which resulted in operators converting their dirty ships to trade in the clean segment.


At least 40 dirty Aframax vessels, which can transport cargoes sized between 75,000 mt and 90,000 mt, have already been cleaned up to trade in the clean market, a source in the Aframax market said Wednesday.


Meanwhile demand for Aframaxes out of the Persian Gulf and Southeast Asia has also gone up -- mainly amid outflow of fuel oil cargoes from Singapore and resumption of crude supply from Sudan.


Sudan resumed crude supply in June this year which tightened tonnage availability in the Middle East. A broker said six to eight Aframax cargoes load out of Sudan a month.


In North Asia, demand for fuel oil has spiked with the onset of winter with a few South Korean and all Japanese nuclear power stations staying offline. Seven of the South Korea`s 23 nuclear reactors are currently offline due to malfunction, scheduled maintenance or work to replace substandard parts installed with fake quality certificates, Platts reported earlier.


Japan currently does not have any nuclear reactors in operation, and Platts earlier reported that Japan`s Tokyo Electric Power Company plans to buy around 600,000 kiloliters (122,000 b/d) of crude and fuel oil in December, up 33% from 450,000 kl in November.


Brokers said that for loadings in H2 December, there were at least eight uncovered Aframax cargoes for loading out of the Persian Gulf or Red Sea, and 14 cargoes were heard for the Indonesian Aframax market.


Market watchers said that for the first time this year owners are in the driver`s seat in the East of Suez region. "Everything is in the owners` favour right now, there is tight tonnage and with Christmas coming up its a busy week," said an Aframax shipowner source.