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Dirty-to-Clean Switch Caps High LR2 Tanker Rates: Platts

FREIGHT

Robust earnings on clean LR2 products tankers, coupled with tonnage tightness due to the rerouting of ships from the Red Sea, have prompted large-scale switching of dirty tankers into trading clean products, Platts said.

  • The move has caused considerable pressure on clean tanker freight rates with demand for loading refined products falling due to competitiveness of DPP tankers.
  • 10 VLCCs, 48 Suezmaxes, and 85 Aframaxes have switched from dirty to clean products trading to draw better earnings, compared to 7 VLCCs, 22 Suezmaxes, and 58 Aframaxes as of Dec. 31.
  • The availability of VLCCs could bolster the Persian Gulf gasoil complex in the near term, although demand concerns in Europe remain due to a seasonal lull.
  • However, market sources said that it is mainly oil trading houses with their own fleets that can easily make the conversion. Independent owners are unlikely to follow die to cleanup costs and contamination risks.

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