‘Disastrous’ North Sea aframaxes losing $1,750 a day

Aframaxes trading in the North Sea have been losing money in dramatic fashion. Describing rates on the key trade from Hound Point to Wilhelshaven (TD7) as “disastrous”, broker Gibson states spot TCE earnings on this tradelane so far this year have averaged a negative return of minus $1,750 a day.

Gibson noted in its most recent weekly report that in addition to weak fundamentals, there are also factors behind this exceptional weakness that are unique to aframaxes trading in northwest Europe.

Mild weather for most of the winter season reduced to the minimum the volatility in rates. There has also been a notable decline in Russian crude exports in the Baltic. Crude exports from Primorsk and Ust Luga averaged just under 1.3m barrels per day during the first quarter of this year, down by over 350,000 barrels per day compared to the corresponding period in 2017, following the expansion of the ESPO pipeline spur into China mainland. Crude production in the North Sea has also declined, although not so dramatically. Output fell by 130,000 barrels per day during the first three months of this year relative to Q1 2017.

“While there is less demand, tonnage availability is heavier,” Gibson noted, pointing out that since September 2017, there has been a notable increase in volume of US crude being shipped to Europe, primarily on aframaxes, boosting the number of tankers looking for employment in the region.

“The current trade dynamics in North West Europe are unlikely to change dramatically anytime soon,” Gibson warned.

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.
Back to top button