Tankers: Black Sea-Mediterranean Handysize clean-dirty spread hits 2016 high

By Finance

The spread between the cost of sending refined oil products and dirty products to the Mediterranean from the Black Sea on Handysize tankers has hit the highest level of 2016, prompting some charterers to move clean products on dirty tankers, shipping sources said Wednesday (Apr 20).

The spread was high enough to pay for the cost of preparing a vessel that normally carries dirty products to transport clean products, they said, with a few market participants heard moving gasoil cargoes on dirty tankers.

The price difference between Black Sea-Med freight rates on Handysize clean tankers and dirty tankers rose 74 cents/mt to $8.74/mt Tuesday, the highest since July 7 when the rate was $8.96/mt.

Tankers: Black Sea-Mediterranean Handysize clean-dirty spread hits 2016 high

Chemical/Oil Products Tanker Nord Butterfly - Image: Shipping DataBase

Clean Handysize tankers on the Black Sea-Med trip were assessed at $20.19/mt (Worldscale 205), up 49 cents/mt to the highest since July 24 when it was $20.72/mt.

Meanwhile, the dirty rate on the same voyage fell to $11.45/mt (w120), the lowest since September 16, 2009, when it was $11.37/mt.

“It is interesting that some Black Sea gasoil is potentially going on boats with a dirty background as the difference between the clean and dirty market, as well as low gas-oil price, makes it possible,” a shipbroker said.

The Angelia An, with a history of carrying dirty products, was heard on subjects to Clearlake loading clean products on a Black Sea-Med run for April 26-28 laycan at w145. Similarly, the Nord Butterfly was heard on subjects to BP for the same route.

Before traders can use dirty tankers to move clean cargoes, there is a cost of about $100,000 for cleaning the cargo tanks, a shipowner said.

“Considering materials, consumption, people cost, it is not less than $100,000 for sure,” a shipowner said. “Usually you load gasoil clean undarker than 2.5 npa. With a ship ex-dirty cargo, you may have an increase in the color. Undarker is…it is a scale of color, 2.5 is dark yellow. So, product remains in its specification, but loses color. If the trader sells product clear and bright, you run the risk of having the cargo refused,” he said.

Freight rates in the dirty Handysize market in the Black Sea and Mediterranean have been depressed in recent weeks as a slow cargo flow has led to a significant increase in the number of prompt ships available.

While the prompt tonnage list has been slightly reduced by two dirty ships switching to clean trade, dirty market participants said there would need to be more switched to positively affect the dirty market.

“Only a couple of ships have cleaned up. It is not exactly an exodus so far. I would have thought the clean market would have needed to be firmer for longer to do this, but it is not as though the dirty side looks like it will move up any time soon,” said a shipbroker in the dirty Handysize market.

Source: Platts