Houston — Freight rates in the Americas dirty tanker market fell Wednesday amidstronger bunker fuel prices in the Americas, an atypical pattern.
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Ex-wharf bunker fuel at Houston averaged $362.73/mt for the 15-day periodended Tuesday, $8.1/mt higher than the previous 15-day period.
All tanker segments, excluding VLCCs, have seen rates steadily declinethis year, despite occasional upticks.
VLCC class vessels have held steady due to slightly shorter positions forFebruary loading in the Caribbean.
S&P Global Platts assessed the Caribbean-US Gulf Coast route forAframaxes at $6.98/mt Tuesday, near a 50-day low.
VLCCs were assessed at $14.07/mt for the Caribbean-Singapore routeTuesday, fluctuating within a $1/mt range since the beginning of the year.
A shipping source in the Americas said that one method of reducing bunkerfuel consumption is by reducing sailing speed.
"A half knot reduction can lead to a rise in $500 on the [time charterequivalent]," the source said. "That's about $25,000 in bunker savings."
He added that reduced speeds can be negotiated on charter parties forladen voyages.
Although Suezmax vessels were trading at near parity to the Aframaxes onlocal runs in the Caribbean, the larger tankers were feeling more pressure asthey consume more fuel.
"We bunkered in Houston at $400/mt last week," a ship owner said.
Earnings on the key West Africa-UK Continent run, a gauge for thestrength of Suezmax markets, were paying paltry sums, he added.
"Round trip is $4,000/day," he said.
Long-haul Suezmax runs from the USGC heading to Singapore were faringbetter at $15,000/day, but with a long ballast journey back to a load region,it was far lower than it appeared, he said.
OUT WITH THE OLD
Forty-nine dirty products tankers, out of a total 74 tankers, were sentto the scrapyards in 2017, and a forecast for demolitions in 2018 showed asimilar pace.
A shipping report from Alphatanker forecast a total of 94 tankers,including clean product tankers, were expected to go to the breakers in 2018.
"It is going to take a while" before scrappings would begin impactingrates, though, the shipping source said.
Impending ballast water management changes in 2019 and low sulfur fuelmandates in 2020 should see an increase in scrappings for older units wherethe economics do not make sense to upgrade, but questions linger whetherdemolitions can keep up with the pace of newbuilds coming online.
"It is nice to see ships going to the breakers, but it is not fast enoughto counter the newbuildings coming online," said the shipping source.
The first quarter of 2018 was expected to be one of the strongest interms of deliveries of newbuilds since 2007, a report from Alphatanker showed.
A shipbrokers report showed 57 VLCCs expecting delivery in 2018 alongside46 Suezmaxes, 48 Aframaxes and five Panamaxes.
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