Asia freight rates have come off to near pre-war levels, largely due to a lack of cargo availabilities as the region’s major exporters, such as South Korea, China, Singapore and India, curbed outflows and cut refinery runs.
Freight for Clean Petroleum Product (CPP) tankers, which usually transport diesel, gasoline and jet fuel, within the region are particularly affected.
Rates for Medium-Ranged vessels plying the Yosu (South Korea)-Singapore route, for example, have fallen to less $20/mt on March 18, down from a peak of around $23/mt on March 10 and just above pre-war levels of $19.50/mt on March 27.
Rates for Dirty Petroleum Products (DPP) tankers, mainly for crude and fuel oil, also fell, though by a smaller margin, with that for the aframaxes plying the Singapore-Japan route seen at $1.1 million per charter, versus a peak of 1.35 million/charter on Mar 11 and steady versus pre-war levels.
Wood Mackenzie expects rates to fall further, if the blockade of the Hormuz Straits drags on, as refiners run low on crude and product inventories.
Already, China has already instructed its exporters to cancel all March- and April-loading contracts as well as not to sign new ones. Similarly, South Korea has introduced mandatory export caps on refined petroleum products, curbing shipments to 100pc of monthly 2025 levels, while Indian refinery MRPL has declare force majeure on its diesel, gasoline and jet fuel exports.
Shipbrokers told Wood Mackenzie that many shipowners are looking at ballasting their vessels to the US, where rates remain high.
US refiners remain sufficiently supplied with crude, with the country being the world’s largest producer, and has increased exports, notably diesel to Europe, filling the product vacuum.
About 1.1 million mt of middle distillates - diesel and jet fuel – have been loaded and headed for Europe for Marcg also far, slightly more than February’s 1 million mt but still under January’s around 1.9 million mt.
Shipowners of LR2 tankers are also competing for DPP cargoes in Asia, pushing rates lower.
