Crude tankers racking up large losses

Crude tankers are racking up significant losses. The Baltic Exchange reported yesterday that the TD3 between the Middle East Gulf to China did not move up to more than WS 31.21, and that because of higher bunker prices the timecharter equivalent (TCE) earnings dropped to a negative of $316 a day, meaning freight rates do not cover voyage-related expenses. The TD15 between West Africa to China fell to WS 34.7, or a TCE of $4,454 per day. The TD22 between the US Gulf to China weakened to a TCE of $7,584 a day, as bunker prices rose.

Suezmax tankers also were subject to lower TCE earnings, now at $5,418 a day.

Aframax tankers similarly fell to a negative TCE of $2733 per day day.

Rates are being tested in all areas

On the VLCCs markets Fearnleys noted yesterday: “Rates are being tested in all areas, and with bunker prices on the rise it’s more or less negative territory all round unless a ship is scrubber fitted. China Inc. continues to cater for their own, leaving slim pickings for 3rd party owners.”

As per aframaxes, the Norwegian broker warned: “We expect rates to remain at bottom levels as the fundamentals are not there to support a strong bounceback yet.”

A report from tanker specialists McQuilling last week projected spot market earnings for VLCCs to average a loss-making $9,400 per day in 2021 on a non-eco, no scrubber basis. McQuilling forecast aframaxes would also be in red ink territory this year, projecting they’d earn just $6,800 on average per day in the spot markets in 2021.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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