Firm Baltic Aframax market tempts clean shipowners to think dirty

An extremely firm freight rate environment for Aframaxes operating in the Baltic and North Seas has begun to attract the owners of clean Long Range 2 vessels to trade some of their vessels in the dirty market, shipping sources have told Platts.

According to shipbrokers’ position lists, the Propontis and Front Panther LR2s have both made themselves available to trade in the dirty market. Also the Aspasia Lemos — which is an Aframax but which had been operating in the clean sector — was heard on subjects to transport an 80,000 mt crude oil cargo loading at Hamble Tuesday evening.

Ships that have been carrying clean products can jump straight into the dirty market without any complications, which contrasts with when the owner of a dirty vessel ventures into the clean market.

“Those clean ships can load dirty cargoes straight away, while the chemical cleaning cost for a ship to go from dirty to clean can cost up to $150,000,” said a shipbroker.

As well as expensive cleaning costs, a dirty ship converting to clean often has to carry a cargo of condensate or gasoil first before they can move to transporting lighter products such as diesel. So if a shipowner decides to switch they must be confident that the extra returns they can capture in the dirty market will compensate them for the cleaning costs they will incur when they return to the clean market.

The returns available to shipowners in the dirty market in the Baltic and North Sea regions are currently far in excess of those usually seen during the summer months due the fact that there are still as many as 20 laden Aframaxes sitting in the North Sea awaiting discharge orders.

Busy Caribbean and Mediterranean Aframax sectors have also discouraged shipowners from ballasting to the Baltic and North Sea regions, because there has been a steady flow of cargoes in the Caribbs and Med.

The Baltic-UK Continent route, basis 100,000 mt, was assessed Worldscale 20 higher at w160 Tuesday, the highest level since a w175 assessment January 16. The Monterey was heard on subjects for a Kirkenes-UKC voyage loading July 3, with the demurrage at a massive $72,500.

Sources said that with a good chunk of inquiry for early June left to cover, and a tonnage list that was still tight, further rate increases were possible in coming days.

“It’s a busy, busy time. I’m guessing some ships may come back to the market and it is needed. I’ve never seen such a tight list,” said a charterer.
Source: Platts