The cost of carrying crude oil from the Caribbean or the East Coast of Mexico to US Gulf Coast refineries in 70,000 mt Aframax tankers tumbled 14%, as an unusual amount of tonnage opened in the region with first decade November laycans, but shipbrokers do not believe the market will break Worldscale 90 as owners sail out of the region.

Shipowners started to show hidden tonnage when Valero came out to cover two stems Thursday, loading on the east coast of Mexico, and placed three tankers, the Exxon relets Moscow University and Esteem Splendour as well as the Grimstad on subjects at w95 with November 3-7 laycans. This marked a loss of w15 over Wednesday, when activity hovered around w110.

Worldscale 100 was last broken on the Caribbean-USGC run prior to Hurricane Harvey flooding the US Gulf Coast and severely impacting maritime operations. Prior to Harvey’s anticipated landfall on August 25, freight traded at w85-w92.5 during the month of August and hovered at between w110 and w150 thereafter, before touching w95 Thursday, according to S&P Global Platts data.

“We tested the market as fundamentals are now in the charterers’ favor,” a shipbroker said Thursday. “When they came out with the Nov 3-5, there were seven offers into Valero,” another shipbroker said. “Some of those owners had three ships behind them.”

For the moment, shipbrokers believe that freight on the Caribbean-upcoast runs will steady out at w90-w95.

“I think it might stay steady right now, or if we get to w90, [it is] just going to be small dip,” a shipbroker said Friday. “I don’t think tonnage is grossly oversupplied to justify continued downward pressure for an extended period.”

In addition to the three ExxohnMobil relets, the Moscow University, the Esteem Splendor, and the Maran Atlas, company relets by Statoil, the Parthenon TS, and BP, the British Cormorant, traded earlier in the week, pushing on the intra-regional freight values. Russian shipowner Sovcomflot has also been seen with a significant amount of tonnage, including the Moscow Stars, the Kazan and the NS Corona.

Teekay placed the Kazan on subjects at $16,000/day for a USGC lightering operation, a source said Friday.

“It’s not a small amount, though the SCF ships, I think are more regular participants,” a shipping analyst said.

Delayed post-Harvey restarts at ExxonMobil’s 560,000 b/d Baytown and 362,300 b/d Beaumont refineries had shut off crude imports to these plants and draft restrictions at USGC maritime waterways negatively impacted crude deliveries to refinery gates and caused significant delays to USGC lightering operations.

Heavy inchartering by USGC lightering companies, including AET and Teekay, saw lightering cost peak at $27,000/d during the second decade of October, but rates have come down to $16,000/d currently, reflecting smoother operations.

Freight on the USGC-trans-Atlantic trip registered similar losses as it negotiated at w75-w80, down w12.5. Yet that market is in need for a fresh test, as owners continue to favor European waters for comparatively higher earnings than in the Americas. “There has been more support in the Med market […] if you are going into a higher market that will help cut rates to get there.”

Especially Greek shipowners, including Minerva, were heard to have carried stems at very competitive freight of 67% of the value of the Caribbean-upcoast level to the Eastern Mediterranean during mid-October. Caribbean/USGC-trans-Atlantic freight trades, on average, at 80% of the value of the Caribbean-upcoast route.

Source: Hellenic Shipping News.