WAF-UKCM Suezmax freight rates reach 6-year high on limited vessel availability

The cost of sending 130,000 mt crude oil cargoes from West Africa to the UK Continent and Mediterranean has surged to a six-year high as a dwindling tonnage list struggles to accommodate high levels of inquiry from charterers, shipping sources told Platts.

Freight rates on the WAF-UK Continent and WAF-Mediterranean routes were both assessed Worldscale 42.5 higher Wednesday at w152.5. On the WAF-UKC route this equates to $30.13/mt, the highest mark recorded since a $31.66/mt assessment on August 4, 2008.

There were two ships put on subjects at w152.5 for WAF-UKCM voyages on Wednesday, while another vessel was put on subs at w170 to haul a 130,000 mt cargo from Nigeria into land-based storage at Saldanha Bay in South Africa.

Sources said that although the position lists remained tight in WAF, rates were unlikely to be sustainable at these sort of levels for long. “There might be a bit left in this market, we might see a couple more fixtures at these kind of levels before charterers take stock of the market and start to hold back their stems. We’re at the type of levels where the market should re-adjust. It’s a question now of whether the shipowners will push for more or cash in now,” a shipbroker said.

According to WAF position lists seen by Platts, while there is virtually no overhang of tonnage from the previous fixing window, ship availability does increase significantly for the third decade of December. The majority of ships currently getting fixed are for loading at the end of the first decade and the first half of the second decade of December.

Also mitigating against any long stay at the current elevated freight rates in WAF is the fact that charterers have begun to look to the larger VLCCs to transport Suezmax stems. Two charterers have already been heard to have taken VLCCs at w72 and w75 for WAF-UKC voyages in the second decade of December. The effect of this should take some steam out of the Suezmax market and lift the WAF VLCC market due to increased employment of VLCCs and lower use of Suezmaxes.
Source: Platts