Arb trades boost clean transatlantic tanker rates
Clean tanker rates for refined petroleum products on top export routes were mixed on Monday with an arbitrage window bolstering trade in the transatlantic market, Reuters reports.
Rates for medium-range (MR) tankers for 37,000 tonne cargoes from Rotterdam to New York were at W117.29, or $4,276 a day when translated into average earnings, compared with W116.25 or $4,022 a day on Friday and W111.11 or $3,020 a day last Monday.
"MR rates finally saw gains on the benchmark TC2 trans-Atlantic route as the gasoline arbitrage opened once again," Deutsche Bank said on Monday.
Average earnings per day are calculated after a vessel covers its voyage costs such as bunker fuel and port fees. Negative rates indicate costs are greater than earnings.
In April last year, rates reached their highest since 2008 on a jump in U.S. gasoline demand, helping reduce the number of tankers available for hire. Since then, average earnings have remained volatile.
"Further gains could be achieved in the coming weeks as U.S. gasoline inventories posted further draws last week while demand saw modest gains and as U.S. refiners progress into seasonal maintenance programs later in the month," broker CR Weber said.
Brokerage Poten & Partners said there was scope for gains on the U.S. to Europe route, which has languished at depressed levels recently.
"A series of refinery outages in the Atlantic Basin and anticipated seasonal maintenance have sharply tightened regional gasoil balances and have sent European diesel prices soaring," Poten said.
"Typically, this would open up the trans-Atlantic arbitrage and encourage U.S. Gulf diesel cargoes into Northwest Europe or the Med, stimulating MR demand."
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.
Typical Long Range 2 or LR2, 75,000 tonne shipments on the Middle East Gulf to Japan route were at W98.00 on Monday in the worldscale measure of freight rates, or $7,289 a day when translated into average earnings, from W98.70 on Friday or $7,463 a day and W99.75 or $8,167 a day last Monday. In July rates hit their highest level since late October of 2011.
Long Range 1 tankers, carrying 55,000 tonne loads from the Middle East Gulf to Japan, were at W119.79 on Monday, from W120.05 on Friday and W120.05 last Monday.
"LR1s were quieter than usual and consequently rates slipped down to below W120," broker E.A. Gibson said.
In the Mediterranean, 30,000 tonne shipments ex-Algeria to southern Europe were at W128.89 on Monday, versus W128.50 on Friday and W127.78 last Monday.