The cost of sending 30,000 of fuel oil from the Baltic to North West Europe rose sharply Wednesday as fuel oil exports climbed ahead of ports in the Baltic region icing up and bringing in loading restrictions, shipping and trading sources said Thursday.
Freight rates on the Baltic-NWE route, basis 30,000 mt, jumped Worldscale 15 over the day to w150, reaching the highest assessed since May 21, 2013 when the rate on the route was w152.
Shipping sources continued the indicate the rate on the route at w150 early on Thursday on the back of a tight tonnage list and more demand for cargoes.
"More stems are in the market and ships were not available, so it got tight on the prompt positions for the ships," a shipowner said.
Trading sources said fuel oil exports have been ramped up, especially from the Baltic ports, as sellers are keen to maximise volumes before the ports freeze.
In the winter, fuel oil requires heating before being loaded on tankers, and ports restrict the number of arriving rail cars they can handle.
Typically this results in mounting delays along the railways. Traders reported delays of rail cars on the approach to St. Petersburg but attributed this to the current increase of exports.
"Everybody tries to get product out before restrictions are enforced," said a source.
This time last year the temperatures were much lower, but this year the autumn has been unusually mild for a longer period, traders said.
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