The East of Suez LR2 tanker market was steady Wednesday following fresh demand that supported the rates. The recent decline in rates had drawn several charterers leading to a slight uptick.

“I will not call it a recovery, it is more like a correction of rates,” said a broker in Singapore. “However, it is unlikely that the market will spike [further],” the broker said.

Among the fixtures heard, the FS Endeavour was placed on subjects by Mitsubishi Chemicals at w86 for March 3 naphtha loading on the Persian Gulf-Japan route, sources said.

Earlier this week, LR2 fixtures on this route were done around w81-82.5 but after the gains in LR1 rates, owners are seeking w95-100, a chartering source said.

In these circumstances, MCC may have found it prudent to take FS Endeavour around the mid-80s Worldscale points level, the source said.

In the LR1 market, the Torm Ismini was placed on subjects by Clearlake, the shipping arm of Gunvor, at w110 for March 3 naphtha loading on the Sikka-Japan route, sources said.

Many market participants, particularly in China and Vietnam are still away for the Lunar New Year.

China is closed this week and this may prevent the overall market from seeing substantial gains.

Market participants are also attending the IP Week in London.

Firm LR1 rates and falling LR2 rates imply that the spread between the two vessel sizes has widened.

Market participants now contend that either LR1 freight has to come down or LR2 rate has to go up.

Due to abysmal earnings, owners are trying to push up LR2 rates.

“The LR2 rates are stable or have bottomed out,” said another clean oil tankers broker in Singapore. “LR1 [rates] are solid,” he added.

LR2 earnings are barely $4,600/day for a round voyage on the benchmark PG-Japan route, according to broker estimates. The corresponding number for LR1 is $6,500-$7,000.

The cost of moving 75,000 mt and 55,000 mt cargoes on the PG-Japan route is $14.83/mt and $19.89/mt, respectively, according to the S&P Global Platts data.

The cost is $22.60/mt for MR tankers. MR rates are stable to lower in Singapore and North Asia due to ample supply, market participants said.

The Maersk Teesport was taken by Elico at $340k for February 24 loading on the Ulsan-Nha Be route, sources said.

Source: Hellenic Shipping News.