Current levels are still a good shade below two month ago’s $17,400 per day per vessel and just shy of $14,700 nine weeks ago, when a spike in CPP floating storage fixtures stripped availability of the larger product tankers and boosted LR rates as highlighted above, before fading away steadily as traders cashed in their cargoes at high-enough premiums for good profit on their contango plays.
Now brokers say floating storage fixtures have started increasing again, after fading-off over the past few weeks, bringing up spot rates along with them by stripping spot tonnage availability. It has been estimated that there are at present 60 LR2s and 20 LR1s fixed as floating storage. The global LR fleet currently stands at 213 LR2s and 300 LR1s. Brokers however are also warning that cargo requirements have either been decreasing or flat, which would prevent any robust upswing in rate levels at the moment.
LRs east of the Suez however, continue to earn more than their peers plying the Atlantic, a market which has been ill from overcapacity on the back of persistently dismal US demand for refined products such as gasoline. Brokers however, have started to show more optimism for the Atlantic markets, with most floating storage fixtures being concluded there in the past few weeks, a situation which would naturally tighten up tonnage supply. Still, bearing in mind that the estimated per day per vessel operating cost for LR tankers hovers around $10,000, Atlantic rate levels for many weeks now have been costing operators losses just to keep their vessels employed, while LRs east of the Suez, although performing relatively better, are currently only able to ensure that operators break-even.