Despite expectations of a seasonal pickup in the Medium Range tanker market in the Americas in the fourth quarter -- particularly from November onward -- charterers were able to pressure freight rates lower Wednesday, with Medium Range tankers continuing to sit prompt on the US Gulf Coast.
"While some activity has been bubbling under the surface of the US Gulf market, overall inquiry is still well below November expectations so far," a shipbroker said.
"Several prompt ships are still seeking out employment from the Gulf, which should continue to limit any potential upside in freight rates until tonnage can be cleared out."
"The owners are crying," one charterer said.
The USGC-UK Continent route, basis 38,000 mt, was assessed 2.5 points lower at Worldscale 57.5 Wednesday -- a level not seen since February 16, according to Platts data.
On the key trans-Atlantic voyage -- a major arbitrage route for moving ultra low sulfur diesel from the US to Europe -- ST Shipping was heard to have placed the Seasalvia on subjects for a November 9-11 laycan at w60, while subsequently Valero placed the Gold Point on subjects for a November 10-11 laycan at w57.5.
At these levels, freight on an MR tanker on the USGC-trans-Atlantic route is now below freight on an LR1 tanker.
The USGC-UK Continent route, basis 60,000 mt, was assessed flat at w60 Wednesday, with few large vessels heard to be available in the Americas.
The last done fixture on this route was Valero fixing the UACC Falcon for a November 16 laycan at w60.
"Now if you go out into the market, you're probably not going to be able to grab a w60 for an LR1," a source said. "There are no ships in position to make sense of those numbers now ... they'll just ballast to the Continent."
MR tanker freight rates on all other routes -- both short and long -- in the Americas also fell Wednesday, given the ample tonnage in the region.
On the short-haul routes, PMI placed the Prisco Alexandra on subjects for a USGC-East Coast Mexico voyage loading November 7-9 at $185,000.
"It's brutal. The rationale from owners, whether you agree or disagree, is that the laycans are moving forward. So you're unlikely to get any prompt cargoes now. You can cross your fingers and hope someone approaches you or you take what you can," another market source said.
"The longer the week goes on, the further forward the dates are going to move, so you have to pick your poison."
Even the long-haul routes -- which had been holding up slightly better than the short-hauls due to owners' resistance to lock in low rates and also due to ongoing delays at the Panama Canal -- fell Wednesday, with the USGC-Argentina route assessed 5 points lower at w110 and the USGC-Peru route assessed $25,000 lower at $1.075 million.
Among fixtures heard, Cargill placed the Nave Orion on subjects for a USGC-Argentina voyage loading November 11-12 at w110, while Repsol placed the Chance on subjects for a November 9-11 USGC loading voyage with a Peru discharge option at $1.075 million.
"Theoretically you can avoid long hauls for as long as you want. But when the market is like this, there's no benefit in running your ships prompt," a source said. "Going prompt only works when the market is active; now it's a sign of weakness. If you're sitting prompt, you're vulnerable."
US-based market participants are still expecting freight rates to pick up heading into the peak winter demand season, but not until the front of the list clears out.
"Usually this time of the year, there's lots of cargoes out. ... This time, it's pretty bad," another market participant said. "I don't see it going up in the short term. It's been a roller coaster ride in the USG, but I don't see a big jump this week ... maybe later. There's still vessels around and those will have to clear out first."
Said a shipbroker: "Looking forward to December, we still expect rates to rise; the question remains 'when' and 'by how much'."
All eyes are also on the Europe-US front haul market, which could draw away some vessels from the Americas if it starts to pick up.
"Europe needs to pick up full stop to pull away these AC positions," a US-based source said.
"[The front haul is] picking up a little steam ... so in terms of ballasters off the USAC, they could decide to go across instead of down [to the USGC]; that shortens our list, which ups the market," another source said. At the close Wednesday, the UK Continent-USAC route, basis 37,000 mt, was assessed 2.5 points higher at w105, according to Platts data.
