ECSAM VLCC rates supported by deeply undervalued Tupi crude and China’s pivot to Brazilian barrels
The dominant signal in the ECSAM market is the Tupi crude RBI, which is at -$13.44/bbl, confirming Tupi is materially undervalued relative to competing crude grades on a delivered NWE basis and providing a structurally supportive demand signal for loadings. ECSAM VLCC vessel supply in the 14-day ahead window stands at 4 ships against a 90-day moving average of 6. The supply signal is mildly bullish.
June Goh noted today that China has been actively loading up on Brazilian and Guyanan crude, preferring these grades over WTI, which still carries a 10% tariff, and having been allocated less than half of its Saudi volumes for May as buyers diversify away from the troubled Middle East. This is a direct and meaningful demand tailwind for Brazil-loading VLCCs.
The Sarroch refinery in Italy, a 300,000 barrel per day complex operated by Vitol, has also pushed its maintenance shutdown from late March to mid-May, extending European crude import demand through the period and adding further support for Atlantic Basin loading routes.
Fixture activity over the past three days reflects the constructive backdrop. Front Driva was placed on subjects loading Brazil for China at 144 WS for a 12-13 May laycan, while Union Peace fully fixed loading Brazil for Chile at 184 WS for a 13-14 May laycan.
The wide spread between the two fixtures, 40 WS points, reflects the significant premium charterers are paying for intra-Americas voyages versus long-haul China discharge. Both fixtures were concluded for Petrobras, confirming the national oil company is actively fixing volume into May across multiple discharge destinations.
The undervalued freight RBI confirms ECSAM VLCC freight is value vs relevant global benchmarks, reinforcing the case for rate support and near-term upside. With Tupi crude competitive, China actively seeking Brazilian barrels, and European refinery demand structurally extended, the outlook for ECSAM VLCC rates is constructive. Owners are well positioned to hold firm and push above last done on fresh enquiry.
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