AG CPP Report: LR1s soften & MRs hold steady

AG LR1 rates have eased after peaking, with closed arbs and weaker demand signaling a near-term top, while AG & WCI MR markets move sideways on balanced tonnage.

AG LR1: Spot TC5 rates peaked at 150 WS on 30 October, shortly after the Sparta FSD turned negative on 28 October. The model correctly anticipated a decline to 144 WS, which has now materialized. It currently signals neutral to weak price action over the coming week.All AG-loading LR1 arbs remain closed except for the naphtha arb into Singapore. Even the gasoline arb into Indonesia is shut for November loading, while jet arbs into Europe—open through much of the summer—have remained closed since late August. The demand outlook is therefore bearish for freight. The Mediterranean is pricing naphtha into the Far East at notably stronger levels than the AG. LR1 availability (11, 7-day, 10-avg) has been fluctuating around average since 27 October, showing limited exceptional demand.

Michael Ryan, our Freight Commodity Owner at Sparta, brings over a decade of experience with Trafigura in the energy sector managing risk across products and regions before becoming Head of Risk for subsidiary Puma Energy. Michael then joined the Trafigura commercial team trading freight while successfully growing the physical fleet through strategic dealmaking.

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