The $290K opportunity: Why Sparta traders moved early on TC5, and how you could have too

This Sparta in Action article explores a real-world case where Sparta’s forward-looking freight model accurately predicted a major shift in TC5, showcasing the tangible impact Sparta delivers for our clients.

As the only forward-looking market intelligence platform for the oil market, Sparta provides actionable insights and opportunities that can still be traded, empowering Sparta clients to stay ahead of market movements.

‘Clients who acted and watched this unfold would have gained 65 WS points, increasing their earnings from $15,000/day to $28,000/day on their voyage fixtures for an LR1 out of the Arabian Gulf to the Far East.’

Michael Ryan – Sparta Commodity Owner for Freight

The freight market blind spot: navigating uncertainty without global arb margin clarity

At the beginning of December 2024 naphtha arb margins loading out of the AG heading East into Yeosu and Chiba began to improve dramatically.

Margins were positive by the end of the month. The Sparta freight demand model predicted a move higher in TC5 rates driven by the opening of naphtha arbs.

This lack of foresight in arbitrage-driven TC5 rate rallies directly translates into missed trading opportunities, lower voyage earnings and lost PnL.

Additionally, it leads to sub-optimal vessel and fleet positioning, reducing profits and increasing inefficiencies.

Sparta’s freight dashboard correctly predicts higher freight rates for TC5

Sparta arb data drove the model results and TC5 freight rate prediction. Supply of vessels (bottom left chart of the dashboard) began to drop as vessels were fixed to ship the naphtha cargoes East.

The reduction in vessel supply began to drive rates higher.

The Sparta Freight model identified a leading indicator for higher freight rates in the improving naphtha arb margins.

Rates were projected to rise by just 5 WS points at the end of November. As December progressed and the naphtha arb margins improved the rate prediction moved to 11 points higher from spot levels.

Ultimately the prediction rose to a gain of 21 points higher than spot, TC5 spot rates matched the Sparta prediction of 175 WS on the 16th of January.

‘Sparta for Freight highlighted the open naphtha arbs into the East and gave a clear indication of where freight rates should go basis the positive margins with ample time to make the trade.’

/ Global Freight Trader

The smart money moved, did you?

Clients had the month of December to buy TC5 paper, build a position and capture the rally that then started in the first days January. There was ample time to act.

‘Clients that bought for example 10kt of January TC5 FFA paper at $29/mt in the first half of December (which is where it was trading at the time) and let it price out over the month of January would have made an estimated~$58k. If they had bought 50kt well then they would have made $290k.’

‘If they had chartered out their LR1 vessel in the middle of January they would have earned an additional $13k/day compared to Dec or the first week of January. On a voyage from the AG to Yokohama this would have translated to $663k of additional voyage earnings.’

Sparta’s flexible suite of trading solutions doesn’t just provide insights, it delivers results you can see and measure. Do you want to see the extra gains you could unlock with Sparta using our ROI calculators. Simply select the calculator that’s relevant to you to get started.

Sparta for Freight is built by freight traders and tailor-made for the freight market, delivering actionable insights powered by Sparta’s industry-leading Global ARBs for unmatched trade and vessel positioning. If you would like to see Sparta in action for yourself, book a demo with us today!