Dirty freight market report: Continued strength expected in TD3c

TD3c remains undervalued and bullish. TD20 outlook neutral with TD25 and TD22 mildly overvalued.  

The Sparta RBI (relative basket index) compares the route in question against all material relevant global competing routes delivering crude grades into the same destination. It provides an under/overvalued signal and is an inverse leading indicator for freight demand and FFA price action.   

TD25: RBI overvalued ($1.92/mt spot, $1.60/mt Q4). Afra supply (11, 14-day ahead) four below average and in line with last week. WTI into NWE overvalued $0.68/bbl and not competitive. Sep TD25 has rallied 20 WS points in two weeks, but outlook is neutral-to-bearish on overvalued freight RBI & WTI RBI and only marginally tight USGC Afras. Q4 RBI overvalued and should weaken back toward 160 WS. 

TD20: RBI overvalued $0.97/mt but trending towards neutral. Bonny Light into NWE mildly overvalued (30c/bbl) but overall neutral. Suezmax supply (9, 14-day ahead) in line with average and steady week-on-week. Signals point to sideways freight price action and fairly valued TD20 forward curve through December. 

TD3c: RBI undervalued ($2.68/mt spot, $1.95/mt Q4). Q4 TD3c has strengthened 10 WS points in two weeks while RBIs stayed undervalued — a continued bullish signal implying more upside. Spot materially undervalued and should move higher, narrowing the spread to Q4. AG VLCC supply (35, 14-day ahead) remains below average (42). Arab Light undervalued into China by $1.05/bbl. Sustained RBI undervaluation, strengthening rates, tight tonnage, and cheap crude support more spot and Q4 freight strength. Q4 still a buy near 70 WS. 

TD22: RBI overvalued $2.97/mt spot; Q4 also overvalued but less severely this week. Spot strength lifted RBI valuation higher. WTI into China remains highly competitive, ranking top of the basket for a third week. USGC VLCC supply marginally long (four ships, 14-day ahead). Overvalued RBI against supportive crude and neutral tonnage keeps spot neutral; Q4 RBI remains materially overvalued. 

(TD25 RBI Dashboard)

(TD20 RBI Dashboard)

(TD3c RBI Dashboard)

(TD22 RBI Dashboard)

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.

Sparta is a live, market intelligence and forecasting platform that enables oil traders, refiners, banks, hedge funds and wholesalers to have access to real-time and global actionable insights to capture market opportunities before others.

To find out how Sparta can allow you to make smarter trading decisions, faster, contact us for a demonstration at sales@spartacommodites.com