TANKERS: Americas Aframax freight ends week at all-time lows in pandemic environment

Freight rates for key Americas-loading Aframax routes are at all-time lows after dipping as much as 10% week on week as oversupplied crude inventories, reduced tanker demand, and lengthy position lists allowed charterers to negotiate lower rates.

In the week beginning Sept. 28, the Americas Aframax market has continued to see low demand reminiscent of summer months despite heading into the fourth quarter, when rates typically start to see an uptick.

Freight rates historically see yearly lows in June-August, only to rebound in the beginning or middle of September, according to Platts shipping data.

The benchmark 70,000 mt USGC-UK Continent run was assessed Oct. 1 at Worldscale 45, or $9.17/mt, the lowest level since Platts began assessing the route in March 2018. Freight for the route fell Sept. 30 after Suncor booked the Wisdom Venture at w45, having sat at the w50 level since Sept. 4

Similarly, upcoast freight for ships loading in East Coast Mexico heading to the USGC was assessed Oct. 1 at w50, or $5.09/mt, the lowest level since May 2002, when Platts began assessing the route.

The less-active USGC-East Coast Canada route, typically seen trading at a w2.5-w5 premium to the UKC-bound route, was seen Sept. 30 trading at parity to the trans-Atlantic run at w45, or $5.85/mt. British Petroleum booked the Magnus for the USGC-East Coast Canada run, while Occidental booked the Dubai Attraction for a USGC-UKC/Mediterranean voyage, both at w45.

"Right now, the crude volumes to be moved are so low, that everything is driven by position, and the w5 premium that would usually be commanded on a voyage to East Coast Canada isn't worth the wait," a shipowner said.

Sources have attributed the lack in demand for crude tankers to the current oversupply of oil in the Americas and European markets, which comes as a consequence of a downturn in demand for crude and refined products because of the coronavirus outbreak. Total US crude stocks were at 492.42 million barrels in the week that ended Sept. 25, up 88 million barrels from the same week of 2019.

US crude exports, however, have remained strong in the face of an active storm season along the US Gulf Coast. Total export volumes of US-origin crude totaled 3.51 million b/d in the week ended Sept. 25, rebounding from June lows of 2.75 million b/d.