New waves in freight, part I: USGC-Brazil route emerges as barometer for tanker market

Shifting oil product trade flows have implications for the way the market assigns value to tanker routes. In a two-part series, S&P Global Platts shipping editors look at the impact of new trends in fuel demand and supply on both sides of the Atlantic. Trans-Atlantic product tradeflows are losing market share to Latin American-bound voyages amid rising Middle East refining capacity and diesel exports to Europe. Brazil is the second-largest petroleum products import market in the Americas, with importers spread across major oil companies, independents and traders. As trade flows on the US Gulf Coast-Brazil tanker routes are growing, Americas freight market participants are considering shifting the basis of hedging risk and term contracts from the traditional benchmark 38,000 mt USGC-UK Continent run to the emerging market barometer route in the Americas. Major shipowners surveyed by S&P Global Platts said because the amount of cargo trading from the USGC to Brazil was moving far beyond the trade flow volume on the traditional USGC-UK Continent route, the new pacesetter to South America’s east coast would provide a more robust base for a regional index, to serve as reference price in term contracts. In fact, several tanker owners who had placed their… continue reading

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Source: CTRM Center

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