Dirty freight market report: Spot TD25 & TD20 move lower bringing valuations back to earth

Weakness in both spot TD25 and TD20 has helped make their RBIs more attractive. TD25 is now undervalued, but the USGC is long Afras.

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 is now undervalued by $3.29/mt after being overvalued for almost a month. Afra tonnage in the 10-day ahead window is long though at 4 vessels more than the 90-day trailing average of 13. 150 WS seems to be the fixing rate this week for USGC Afras, but with a long list there should be more downward pressure to come. TD25 only just moved to undervalued in the RBI in the last couple of days. On average over the last 12 months the RBI spent 3 weeks in undervalued territory before rates re-strengthened and moved the RBI back to neutral territory.

• TD20 RBI has moved to neutral after an aggressive overvaluation, which peaked at the highest level in the last 12 months. There is room for TD20 to move into undervalued territory. Prompt tonnage is long at 12 vessels in the 10-day ahead window, which is 8 Suezmaxes longer than the 90-day trailing avg. With the RBI at neutral with spot rates at 90 WS and long tonnage there is more than likely lower spot rates soon to come.

• TD3c spot has been churning sideways recently while the RBI remains marginally undervalued. The 14-day ahead open vessel count though is 13 ships longer than the trailing 90-day avg. More spot rate churn expected over the next week.

• TD22 spot strengthened by ~$2/mt over the last month and has just this weekend pushed the RBI into overvalued territory.

(TD25 RBI analysis)

(TD20 RBI analysis)

(TD3c RBI analysis)

(TD22 RBI analysis)

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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