USGC CPP Market Report

USGC MR vessel supply in the seven-day ahead window lengthened over the weekend to 16 ships (from 11) against a 90-day moving average of 11, placing prompt availability 5 vessels above average. As the week progresses and the open arb backdrop drives fresh enquiry, the list is expected to tighten. Monday counts are usually longer given the typical weekend resupply. The Freight Supply & Demand (FSD) model shows incremental demand of +5 vessels above normal flow and forecasts rates to firm from WS 414 to WS 428 into the 3–12 May load window.

The diesel arb picture is the main bullish freight signal, and it is uniformly constructive across North American load ports and vessel classes. Saint John MR diesel into Rotterdam is wide open at +$93/mt in the earliest May window and remains firmly positive through mid-June. New York MR follows at +$57/mt in May, staying open through the same period. Houston MR stands at +$46/mt for 16–20 May delivery and holds positive all the way into early June. Saint John LR1 runs from +$70/mt margin through to +$39/mt in mid-June.

Houston LR2s and LR1s show open margins through mid-May. The breadth and width of the diesel arbs, open across every load region and every vessel class into at least a six-week forward load window, is a clear signal that Europe is working hard to attract diesel cargoes and that incremental MR demand is structurally bullish.

The Houston to Barcelona diesel arb adds a further Mediterranean outlet at +$5.25/mt in May, while Houston to Buenos Aires diesel remains open at +11.00 cpg and San Jose gasoline remains positive from May through July, confirming that demand pull is not confined to just the transatlantic route.

Fixture activity over the past few days reflects a market that has already begun repricing from last week’s lows. St Petri fully fixed loading USG for UKCM at WS 390 for a 27 April laycan, and STI Westminster was placed on subs loading USAC for UKCM at WS 440 for a 2 May laycan. Mrc Beliz fully fixed loading USG for Peru at $4.1m lumpsum. Hafnia Crux was placed on subs loading USG for EC Mexico at $1.05m lumpsum, confirming that short-haul demand remains steady alongside the transatlantic flow.

TC14 paper markets are starting to price in the rebound. May traded at WS 440, above current spot at WS 414, with the May/June spread at ~90 WS points. June paper firmed yesterday from WS 325 to WS 335. June paper at WS 335 looks like an attractive entry point as forward months continue to roll up to spot and the US remains the CPP product supplier globally.

The sustained USAC enquiry has pushed transatlantic levels back up to WS 450. This effectively limits the usual USAC vessel resupply into the USG, which helps alleviate some of the pressure from the steady stream of ballasters.

With the USGC tonnage count set to tighten as enquiry picks up off the back of diesel arbs wide open across every North American load port and vessel class into Rotterdam, the fundamental case for higher TC14 rates is strong. Owners should hold firm and push above last done; WS 435 is the likely near-term target, but the bullish arb backdrop supports further upside.