Long Range Clean Tanker Rates Fall on Slower Trade

Clean tanker rates for refined petroleum products on top export routes were softer on Wednesday with slower business taking its toll on the Long Range market.

Long Range 1 tankers, carrying 55,000 tonne loads from the Middle East Gulf (MEG) to Japan, were at W129.17 or $15,838 a day on Wednesday

That compared with W131.67 or $17,057 a day on Tuesday and W134.55 or $18,493 a day last Wednesday.

"With Easter behind us and less activity last week, East rates have been under pressure. The position lists have built up during the holiday leaving charterers with more tonnage to choose from hence owners are struggling to maintain the rates level," broker Fearnleys said on Wednesday.

Late last year the volume of LR1 fixtures jumped to their highest in years, helped by healthy naphtha and jet fuel bookings to Asia, sending earnings to their highest since early October 2009.

Larger Long Range 2 or LR2, 75,000 tonne shipments on the Middle East Gulf to Japan route were at W98.95 or $13,925 a day. That compared with W100.27 or $14,874 a day on Tuesday and W103.14 or $16,665 a day last Wednesday.

Rates for medium-range (MR) tankers for 37,000 tonne cargoes from Rotterdam to New York were at W139.38, or $12,294 a day when translated into average earnings. That compared with W140.83 or $12,796 a day on Tuesday and W142.08 or $13,132 a day last Wednesday. Last this month average earnings reached their highest since late 2011.

Brokers said a rush of bookings before the Easter holiday had slowed, leaving MR rates in their recent range.

In April last year, rates reached their highest since 2008 on a jump in U.S. gasoline demand, helping to reduce the number of tankers available for hire. Since then, average earnings have remained volatile.

Analysts said reduced refinery capacity in the Atlantic Basin could boost long-haul demand for the wider products tanker sector in coming years.

"The product - gasoline and diesel - tanker sector will fare better than crude because it is approaching a demand-and-supply equilibrium already this year and given that this may help to ease the built-up overcapacity in the product tanker fleet and, so, boost charter rates," Standard & Poor's said in a report.

"Just how resilient this likely equilibrium is, will depend on the pace of the new ship orders, which have accelerated in the past months."

--Reporting by Jonathan Saul; Editing by Louise Heavens (C) Reuters 2013.