Healthy returns for shipowners in the East of Suez Long Range II clean products tanker market is luring operators of dirty Aframax vessels to convert their ships to trade in the clean segment, shipping sources said.According to market watchers, at least four dirty Aframax vessels, which can transport cargoes sized between 75,000 mt and 90,000 mt, are being converted or are in the process of being cleaned to trade in the clean market."We have cleaned up one ship and looking at converting another two into clean tankers. The prospects for the CPP [clean petroleum product] LR2 market are looking much better than the Aframax market," a source with an Aframax and LR2 ship-owning company said.
The LR2 market started picking up since the beginning of the second quarter of this year, attracting owners of Aframax vessels with epoxy-coated tanks to the clean market. Clean petroleum products such as gasoil, jet fuel, gasoline and naphtha can be moved only on vessels with epoxy-coated tanks.
Platts assessed the rate for the benchmark dirty Persian Gulf-East route at 79 Worldscale points Thursday for Aframaxes, while the LR2 rate for clean cargoes on the route was pegged at w92.The Persian Gulf-Japan rate for hiring an LR2 ship, which hit a year-to-date high of w105 points on March 22, has remained above w90 since March 4, while the Persian-East rate for chartering a dirty Aframax vessel has traded below w85 since February 20, data showed.
While the current spread of w13 points between the Aframax and clean LR2 rates on the Persian Gulf-East route is wide enough to prompt some shipowners to clean up a dirty vessel, market watchers expect the clean tanker market to offer healthy returns going forward this year compared with the dirty segment.
Brokers put the current time charter equivalents or the daily earnings for an LR2 vessel trading in the Asian market in the region of $16,000-17,000 per day and for an Aframax tanker at around $4,500-$5,000 per day.Among the Aframaxes that have been cleaned up and moved into the LR2 market are the Zaliv Vostok, Zaliv Baikal, Totonno Bottiglieri and the Ocean Pegasus, the owners of which could not be reached immediately for comment.BETTER PROSPECT FOR LR2 MARKET GOING FORWARD"The naphtha arbitrage out of Europe is open ... and lately we don't see LR2s ballasting from the West to the East market. But the North Asian market is also strong and many ships are being fixed for back-hauls," said the source with an Aframax and LR2 ship-owning company pointing to the burgeoning demand for these vessels.
"Also sooner or later Australia will stop importing crude as the refineries there will close and will start importing more gasoil and jet fuel on LRs," the source said.
Uncoated Aframax and Suezmax vessels have been competing with the LR2 vessels for moving middle distillates from the East markets to the West."These vessels were pushing rates down as they were fixing gasoil on their first voyages with huge discounts on the freight. So it [the LR2 market] looks more [positive] than the Aframax market and will be for some more years," the source added.
Meanwhile, some Aframax operators said the movement of the dirty tankers into the clean segment, will not have "a great impact" on the Aframax market.
TANKERS
28 April 2013 - 22:25
Aframax owners convert tankers to improve earnings
Healthy returns for shipowners in the East of Suez Long Range II clean products tanker market is luring operators of dirty Aframax vessels to convert their ships to trade in the clean segment, shipping sources said.
TANKERS
28 April 2013 - 22:25
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