NWE MR TC2: Tonnage list lengthening as long-haul demand retreats and gasoline arb stays shut

Vessel supply in the NWE MR market stands at 17 ships in the seven-day ahead window against a 90-day moving average of 15. Incremental vessel demand is neutral. The Freight Supply and Demand (FSD) model reflects this and projects rates to trade sideways to mildly lower over the coming week into the 26 April to 5 May load window. TC2 rates likely soften further though in response to TC14 weakness. What makes this supply picture more telling is the trajectory: the prompt MR count has risen from as few as four ships at the start of April to the current 17, a significant lengthening that has accompanied a marked pullback in long-haul cargo activity.

The Rotterdam to New York gasoline arb remains closed at -5.15 cpg in May, though the margin has improved materially over the past week, sitting meaningfully less negative than a week ago. That improvement has not yet been sufficient to generate transatlantic gasoline demand, and the Rotterdam to New York diesel margin is deeply negative at -45.45 $/mt in May, a signal that European product markets are pricing to keep distillate barrels onshore amid tightening supply conditions. Neil Crosby noted today that the TA arb might look a little toppy at current levels, even though May ARA-NYH RBOB blender margins have reached a six-week high on a net-RVO basis and ARA barrels are now competitive into select new destinations including Mexico City Tuxpan for May delivery.

The Amsterdam to Montreal gasoline arb is open at +15.95 cpg in May, though it narrows sharply into June and July. The heavy naphtha arb is open into NYC through August loaders and the gasoline arb into Argentina is open through July. Overall, arbs are supportive NWE MR enquiry, but long-haul demand has deteriorated.

Fixture activity so far this week has been entirely intraregional, confirming the shift away from the trans-Atlantic trades that had been supporting cargo demand and vessel absorption earlier in the month. Seadevil was placed on subs loading Cont for UKC at WS 415 with a 24-26 April laycan, Ardmore Endurance followed on the same routing at WS 415 for 26-27 April, and Navig8 Executive was placed on subs Cont to UKC at WS 410 for 24-25 April dates. All three are short-haul trades and do little to soak up the tonnage that has been steadily accumulating since early April.

TC2 paper markets are also pointing lower, with May FFA trading at WS 260 and June settling at WS 185. The USGC MR is long vessels and the TA diesel arb shut again at the end of last week. TC14 rates should soften towards WS 425 before charterers begin to take advantage of more economical rates en masse. The weakness in TC14 will pressure TC2 lower as well.

NWE MR charterers are well positioned to cover May requirements at current or below last done levels without urgency. Owners face a more difficult near-term outlook with the prompt list at its longest since early April, long-haul demand absent, and the paper market pointing lower; charter out sooner rather than later.