With increased demand China is sourcing more and more supply from the Atlantic to replace lost Middle East cargoes, adding to ton mile and thinning the MEG position list. Add to that a delayed start to the June program, with corresponding compressed activity, and the VLCC market was rigged for an uptick. Having bottomed out in the very high WS 40’s for the benchmark MEG/East route, rates have since shot up. Last done at time of writing is a WS 64.5 paid for a MEG/China run, and WS 62.5 from West Africa for same destination. Arguably increased bunker prices are capping some of the gains, but sentiment is a strong driver and with a number of uncovered cargoes, remaining rates could easily continue to tick up.

Similar to last week, Suezmaxes are struggling all over, with no place to hide at the moment. Owners prefer to fix short voyages, or wait it out. The tonnage list in the Atlantic is long, but not hopeless. In the East on the other hand, it looks terrible. Two weeks of almost no activity has built up a list we have not seen in quite some time. A 30-day count in the MEG shows 141 ships on paper, which will make most owners give in. Until today it has been difficult to find any positive signs at all, but things have started happening with VLCC activity and rates moving in the right direction, which should spill over into the Suezmax segment. Additionally, we now see some movement in Libya as well. It remains to be seen if this is sustainable, but getting Libya barrels back in play would be a huge plus.

In the North Sea and Baltic market, we have seen a significant downward correction on rates. Mainly due to lack of activity and even relets are now competing over the few available market cargoes. In the week to come, we expect rate levels to dip further and then hover around bottom levels in the short run with no immediate signs of recovery just yet. The Mediterranean and Black Sea market has more or less moved sideways the past week as prompt ships pile up in the area and little activity from charterers has made it difficult for owners to revive an upward pressure on rates. At the time of writing, a cross-Med voyage currently pays just above WS 80 giving owners a TCE return of around USD 15,000 per day. One to follow going forwards is if any development arises in crude oil activity from Libya.

After last week’s «push», the market started to slide prior the long weekend for UK and Singapore and continued so this week. Week on week the Australia-China iron ore route is down by 10% and the average time charter route down by 4%. The Brazil-China route has been very quiet and value more or less the same as last week, however sentiment is also negative for this trade. There has been some period activity, but on index linked structures as owners hardly see it as a good timing to go for fixed priced.

The Panamax market has seen a very quiet start to the week with holidays end of last week and the start of this. Although we’ve seen some rate increase it is a flat tendency with more cargoes in the market, but the list of available tonnage is still outnumbering the requirements. TA’s are now fetching excess 6,000 while fronthauls are being fixed in region 11,000-12,000. In the Pacific, rounds are being fixed in region 6/7,000 depending delivery and duration.

Another positive week for the Supramax market with Baltic Index climbing slowly upwards. Though activity was somehow disrupted to the widespread holidays. South East Asia and India have seen good gains in the rates. 63,000 dwt was fixed from EC India to China with iron ore at USD 13,000 pd. Another Ultramax delivery Vietnam was fixed at USD 9,500 pd for a trip via ECI to China. The Pacific market gained premium as well, and owners were able to obtain around USD 1,000 premium compared to last week’s rates. The Continent and Mediterranean markets was comparably quiet again due to the holidays across Europe. Owners increased their rates for FH asking USD 12,000 for trips to India and Far East. USG still suffers lack of cargoes, and 63,000 dwt was fixed at USD 9,000 pd from USEC to China. ECSA see slightly better returns with rates about USD 11,000 pd plus USD 110,000 GBB Ultramax.

EAST
The week got off to a quiet start with several countries on public holiday on Monday. But since then we have seen a few ships being fixed away for 2nd decade June loading in the Middle East. All of these deals have been reported in the lower USD 30s Baltic, and with a continuous lengthy list of available ships in the East, freight rates will continue to be under pressure. As this trend seem set to continue for current and next fixing window, some owners have decided to send more ships back West via Cape hoping for better freight returns there. Meanwhile, there are talks of a few more uncovered cargos from Indian majors during mid and 2nd half of June, but time of writing it remains to be seen how many of these that can actually be firmed up.

WEST
Activity at the start of this week has been limited, with most of the West having a public holiday on Monday. A handful of fixtures and FOB transactions has meant that the positions list is a little bit shorter than it was, but it remains on the long side with a combination of owner-controlled ships and trader relets available throughout June. There is still a slightly bearish sentiment as a consequence.

Some charterers will be waiting for the release of US stats tomorrow before making any further decisions on freight. However, given freight length and the fact that inquiries are still focused on June even though we are nearly over with May, it might be that charterers will remain relaxed and could wait until laycans are even more prompt.