June 16, 2020 | By Blake Stasa
Over the last six months, the number of relet vessels in the spot market has doubled. “Relets” are vessels that are commercially managed by oil companies that participate in the spot market.
So far in 2020 we have seen remarkable conditions in the tanker market. Covid-19 caused drastic changes to supply and demand levels, from delays at ports to significant demand to oil storage, and there was a drastic collapse in oil pricing. When demand for floating storage spiked, oil companies hedged their exposure through time charters. In the graph below, you can see this trend on a weekly basis.
Relet vessels by type (source: The Signal Ocean Platform using data from Signal Maritime’s account)
The Signal Ocean Platform continuously tracks and updates the market deployment status of tankers as one of the outputs of the fusion of geospatial information and commercial information. This makes it easy to aggregate data and easily spot these trends. The data analyzed here comes from The Signal Ocean Platform using data from Signal Maritime’s account.
Below is a graph showing the upward trend in Aframax relet vessels and program tonnage as charterers have increased their commercial fleet sizes in the past few months. An increase in the number of relets in the spot market can occur when oil programs are “long” on tonnage.
Aframax in the Spot Market vs. Aframax in the Relet/Contract/Program (source: The Signal Ocean Platform using data from Signal Maritime’s account)
Indeed, oil companies have become some of the largest commercial operators in today’s freight market. Below is a graph showing selected charterers and a breakdown of their large, dirty vessels, for January and May 2020.
The breakdown, by vessel type, of vessels per commercial operator for January and May 2020 (source: The Signal Ocean Platform using data from Signal Maritime’s account)
Until the wave of time charters that started in March 2020 re-deliver, we may see this influx of relet tonnage blunt the freight market volatility we have experienced recently.
What has the impact been on freight rates so far? In the graph below, the solid blue line represents the number of relet vessels as compared to the three key Aframax freight markets (in the US Gulf, in the Mediterranean, and in the Far East).
Aframax Relet Vessels vs Market Rates (source: The Signal Ocean Platform using data from Signal Maritime’s account)
We see that this impact can be felt in key Aframax freight markets globally.
How long do you think these market conditions will last?
To learn more about Signal Ocean, and get access to more Analytical and Market Reports, as well as access to API’s and the data behind The Signal Ocean Platform, request a trial here: www.signalocean.com/platform
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