Freight rates for smaller long-range (LR) vessels to move naphtha and other clean oil products from the Middle East to Japan have hit near 12-year highs, Refinitiv data showed, driven by a demand surge for floating storage to combat oversupply.
The shipping index benchmark for LR vessels that can carry 55,000 tonnes, also known as TC5, rose to Worldscale (W) 205 as of April 2, the highest since late 2008, Refinitiv Eikon data showed.
Worldscale is an industry tool used to calculate freight charges, trade and shipping sources said.
"The freight rates are due to floaters. Europe is not buying. United States is not buying," said a Singapore industry source who tracks them.
At least 12 tankers, including a newly built supertanker, have been booked in recent days to store refined products as lockdowns to restrict the spread of the coronavirus have crushed demand worldwide and affected about half the globe's population. Rates for larger LRs carrying 75,000 tonnes of clean products along the same route have increased to W198, the highest since October 2019, Refinitiv data showed.
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