Clean tanker floating storage interest renewed
Charterers have shown renewed interest in floating storage for oil products in Europe, as freight rates have fallen significantly since April, despite the contango price structure having flattened from last month.
Gunvor's chartering arm Clearlake put the Zantoro on subjects this week to store a 90,000t cargo near Europe for 45-90 days at $34,000/d with delivery in Gibraltar and redelivery in the Mediterranean or northwest Europe. And other firms are also offering cargoes for storage or for voyages with an option of storage instead, shipbrokers said. Trading firm Trafigura is seeking a ship for a 60,000t-80,000t diesel cargo in the North Sea with storage options for 30-90 days. Glencore's ST Shipping is also offering a 90,000t short-haul diesel cargo with a 30-90 day storage option and Total is looking to store jet fuel in west Africa for 30-90 days, according to market participants.
But as with previous storage deals on offer, charterers looking to have storage as an option probably want flexibility in case floating storage economics become viable. One shipbroker said the cargoes are "very much opportunities" for charterers but "not firm" and that they would take a vessel for storage "if the numbers [shipowners] offer make financial sense".
At $34,000/d, Clearlake would effectively pay just under 38¢/t a day for a 90,000t intake, before accounting for other operational costs such as bunkers, insurance and port costs. Prompt fob French diesel prices closed at $289.25/t yesterday, while Ice June gasoil settled at $299.50/t, and Ice July gasoil at $311.25/t. The discount of prompt diesel prices to the July contract is $22/t. If the ship loaded today and discharged on 13 July, one day after the expiry of the contract, Clearlake would pay $20.02/t in chartering costs to store the cargo for 53 days. But a charterer booking a ship now would probably load the cargo later than today, requiring fewer days of storage, assuming there are no logistical issues to delay discharging. This means that storage plays could be profitable for charterers, depending on how much risk can be mitigated.
The contango price structure on gasoil remains relatively steep, but flattened from earlier weeks, as countries started slowly lifting Covid-19 lockdowns. But freight prices were extremely high in April which made it increasingly difficult for traders looking for a time-spread arbitrage window by storing products. Storage bookings slowed as a result, the Argus floating storage bookings database shows. But in the past few weeks, freight prices have fallen more quickly than the prompt diesel discount to second month prices. The prompt French NWE diesel to second month gasoil discount fell by 55pc from 27 April to 20 May, while the Mediterranean to Japan LR2 freight rate fell by 69pc in the same period.
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VLCC seeks diesel loading in US Gulf coast
VLCC seeks diesel loading in US Gulf coast
New York, 26 August (Argus) — A very large crude carrier (VLCC) is available to load ultra-low sulphur diesel in the US Gulf coast, with the 270,000t cargo size likely to draw cargoes away from the 38,000t medium range (MR) tanker-dominated market for US Gulf coast refined products shipments, if its owner can secure a deal. The operator of the Nissos Kea VLCC, owned by Okeanis Eco Tankers (OET), began seeking a diesel cargo in the US Gulf coast on 23 August, and the vessel remained available on Monday, according to shipbrokers. It is uncertain whether the vessel can secure a deal for a diesel voyage. Another of OET's VLCCs, the Nissos Kikouria, similarly cleaned up for a potential diesel loading from the Mideast Gulf in late July, but ended up loading a crude cargo from the region instead. The rare crossover in the US Gulf coast from the crude vessel segment comes in the wake of VLCC owners cleaning their vessels thoroughly to ship diesel cargoes into Europe around the Cape of Good Hope from the Mideast Gulf amid the ongoing Houthi rebel threat for Suez Canal transits. The Argus -assessed rate for a US Gulf coast-Europe voyage loaded onto an MR tanker stands at $31.12/t, while the rate for a VLCC carrying a typical 270,000t crude cargo to Europe from the US Gulf coast is at $11.48/t based on a lumpsum rate of $3.1mn, without considering lightering costs necessary to physically load the vessel and likely demurrage costs associated with that loading. The rate proposed for the potential diesel cargo loaded onto the Nissos Kea was at $3.95mn on Friday, according to some shipbrokers, which could reflect a premium sought by the shipowner for the atypical loading. A major US refiner considered chartering the VLCC to take diesel, the refiner confirmed to Argus today, while noting that the cost discussed for the Europe-bound voyage was well below $3.95mn. The global VLCC market has been under pressure since mid-May amid weaker crude demand in Asia-Pacific, especially in China, the world's biggest oil importer. VLCC rates from the US Gulf coast to Europe fell to $2.7mn on 13 August, down from from $4.95mn on 20 May, which could entice shipowners to consider more lucrative opportunities in the refined products market. European buyers are not the only ones in the market for large diesel cargoes loaded onto crude tankers. Petrobras shipped two diesel cargoes loaded onto Suezmax crude tankers from the Mideast Gulf to Brazil in late July. Brazilian buyers showed a propensity for larger cargoes as recently as 20 August, when Brazil's demand for long range 1 (LR1) clean tankers from the US Gulf coast boosted physical activity for the 60,000t tanker segment to its highest in 2024 for a single day. The jump in demand from Brazil for US Gulf coast-loading products comes as Russian focuses on domestic stockpiling, making US Gulf coast-loadings much more competitively priced for Brazilian buyers than during most of the period since Russia's invasion of Ukraine in February 2022. By Ross Griffith and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
German distillate demand rises as prices drop
German distillate demand rises as prices drop
Hamburg, 26 August (Argus) — Demand for distillates in Germany rose last week after domestic heating oil and diesel prices dipped to their lowest level in at least a year. Traded heating volumes as reported to Argus rose by almost 46pc week-on-week. Diesel volumes increased as well, although less significantly. A drop in domestic distillate prices encouraged consumers to stock up on product. Heating oil traded around €2.60 cheaper in the national average last week compared to the week before. Diesel traded €3 lower on average. The price decrease came after Ice gasoil futures fell to their lowest level in about 13 months. Regional oversupply is putting additional pressure on distillate prices. The Miro group's 310,000 b/d Karlsruhe refinery in southwestern Germany is producing at a high level. Supply in the region exceeds demand, traders say, especially for diesel. Maintenance at the 187,000 b/d Godorf plant of Shell's Rhineland refinery began on 26 August . The plant was taken offline for the duration of the works. Operator Shell expects the turnaround to last until mid-October. Supply in Germany's west could be reduced until the plant is operational again. However, traders can still load product at the refinery's 147,000 b/d Wesseling plant, which is unaffected by the work. By Natalie Mueller Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oil rises as Israel-Hezbollah clash fuels uncertainty
Oil rises as Israel-Hezbollah clash fuels uncertainty
Singapore, 26 August (Argus) — Oil prices have climbed today as tensions escalate in the Middle East following Israel's pre-emptive strike against militant group Hezbollah's positions in southern Lebanon. The potential for wider conflict in the region has raised concerns about oil supply disruptions. As of 05:18 GMT the Ice front-month October Brent contract was at $79.52/bl, higher by 53¢/bl from its settlement on 23 August when the contract ended $1.80/bl higher. The Israeli military launched an air operation involving approximately 100 aircraft to neutralise Hezbollah missile launchers. This action came in response to Hezbollah's attack on Israel, which included hundreds of rockets and drones, marking one of the most severe clashes in nearly a year of continuing hostilities. The timing of these strikes coincided with negotiations in Egypt's Cairo aimed at brokering a ceasefire in Gaza. Hezbollah, backed by Iran, claimed to have fired 320 Katyusha rockets at Israeli targets, describing this as the initial phase of retaliation for Israel's elimination of a high-ranking Hezbollah commander the previous month. While Israel's foreign minister Israel Katz stated that the country was not seeking a full-scale war, Israeli prime minister Benjamin Netanyahu issued a warning, suggesting that further action might be forthcoming. Houthis add to threats Adding to the regional tensions, Yemen's Houthi rebels, also supported by Iran, expressed support for Hezbollah's actions and reiterated their own threats against Israel. The situation in the Red Sea remains precarious, with the Houthis claiming responsibility for an attack on a Greek-flagged oil tanker, the Suexmax Sounion . This incident has not only raised shipping security concerns but also poses potential environmental risks in the area. The Houthis on 23 August posted a video of what they said was an explosion set off by its fighters on the Sounion , carrying 150,000t (1.1mn bl) of crude. The stricken tanker, which is adrift and unmanned, is "both a navigational and an imminent environmental hazard", according to the EU's naval force Operation Aspides, an EU defensive maritime security operation under the EU Common Security and Defence Policy. By Janet Ong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian labor board orders rail service to resume
Canadian labor board orders rail service to resume
Houston, 25 August (Argus) — Canada's two Class I railroads avoided a crippling extended work stoppage on Saturday, after an independent labor board upheld the Canadian government's order for the railroads to enter binding arbitration with a labor union representing more than 9,000 rail employees. The Canada Industrial Relations Board (CIRB), in two separate orders, directed the Teamsters Canada Rail Conference (TCRC) to enter binding arbitration with the nation's two Class I railroads — Canadian Pacific Kansas City (CPKC) and Canadian National (CN). The order heads off an extended work stoppage that would have echoed across North American supply chains for virtually all commodities, from crude, refined products, LPG and coal to fertilizers like potash, as well as consumer and industrial goods. Virtually all railed shipments carried by CN and CPKC came to a grinding halt early on 22 August after months-long talks between the railroads and the TCRC hit an impasse. Later the same day, the Canadian government stepped in to force parties into binding arbitration, but the TCRC said it would not abide by the directive without a ruling from the CIRB. In its rulings, the CIRB ordered CN and CPKC employees represented by the TCRC to resume their duties as of 12:01 am EDT on 26 August and remain "until the final binding interest arbitration process is completed". The CIRB also ruled that no further labor stoppages, including lockouts or strikes, could occur during the arbitration process, effectively voiding a TCRC strike notice issued on 23 August for CN workers set to take effect on 26 August. CN and CPKC said they will comply with the CIRB order, and CPKC asked TCRC employees to return to work on 25 August "so that we can get the Canadian economy moving again as quickly as possible and avoid further disruption to supply chains". The TCRC said it would comply with the CIRB decision, even though it sets a "dangerous precedent". TCRC plans to appeal the ruling in federal court. "The ruling signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union," TCRC president Paul Boucher said. "The rights of Canadian workers have been significantly diminished today." It could take weeks for Canadian rail operations to return to normal. CPKC said it could take several weeks for its rail network to fully recover from the work stoppage and even longer for supply chains to stabilize. Canadian railroads last week embargoed shipments of toxic materials and earlier this week stopped loading any new railcars. By Chris Baltimore Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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