Clean freight market report: All USGC arbs are slammed shut

USGC MR July loading arbs are all slammed shut. Margins are abysmal with freight at 230 WS. Tonnage has been tight with the 7-day ahead vessel supply consistently under the 90-day avg for the last two weeks. Basis supply and demand the Sparta rate forecast is calling for TC14 to drop below 220 WS.

To reopen the diesel arbs into Europe though freight would need to narrow all the way down to August pricing circa 125 WS. The spot / Aug spread needs to narrow massively. Tonnage counts are creeping up now, which makes sense given that there will be no incremental arb driven demand at these freight levels.

Fixing activity will drop off materially 2nd half of this week given the long 4th of July holiday weekend. Tonnage lists next week could look lengthy so expect some mild negative sentiment post long weekend.

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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