Clean tanker rates decline as Hormuz curbs Asian naphtha imports
CLEAN tanker rates are starting to see a sharp decline in voyages from the Middle East to Asia as the turmoil on the Strait of Hormuz continues to prevent loadings of naphtha and other clean petroleum products.
Data from maritime data analytics firm Vortexa shows that 40.8m barrels per day of naphtha are in transit from all origins to Asia. This is a figure that is approaching the lows seen when the Russian war with Ukraine first broke out in 2022, curbing naphtha supplies and during the start of the pandemic in 2020, when demand for naphtha fell sharply.
Of the limited barrels heading to Asia, 47.9% come from the Middle East. Russia is the highest single-country origin for current flows to Asia, making up close to 24% of naphtha-laden vessels currently in transit to Asia.
Clean product tanker operators are on the lookout for potential changes in trade flows to position vessels to capitalise on any changes.
Drewry analyst Anshika Prajapati expects long-range clean tanker tonne-mile demand to rise in the short term, as Asian importers look for new sources of naphtha.
“If the disruption persists, vessels will reposition, particularly towards the Atlantic. The US will benefit more, as it can increase shale oil production when oil prices surge. As a result, tonne-mile demand for LRs will increase during this churning,” she said in a note last week on the rapidly evolving situation in the Strait of Hormuz.
But the landscape is expected to change in the long term. She added: “However, in the long run, the prolonged closure will lead to lower refinery runs, reducing petrochemical feedstock supplies and eventually wiping out 24% of global seaborne naphtha that transits through the strait.”
Choked flows choke production
The long-term view presented by Prajapati could come to pass sooner than expected.
Vortexa data shows South Korea and China are the largest importers. They imported 29.6% and 18.8% respectively of the 855m barrels discharged in Asian ports last year.
The decline in demand from these countries could be prolonged.
ICIS reported that South Korean petrochemical producers are cutting run rates by 27%-50% across various plants. According to ICIS, more than 55% of its naphtha imports come from the Middle East with the UAE, Qatar and Kuwait being its top three suppliers.
China is also looking to cut production rates by 10%-30%.
Reduced run rates will curtail demand for naphtha imports. This will add on bearishness for clean tanker rates from the Middle East to Asia.
The Baltic Exchange’s time charter equivalent rates have started to see declines in the clean tanker segments for runs from the Middle East Gulf to Japan. Rates have already fallen 50% since peaking at the onset of the turmoil in the SOH.
Rates remain far above the norms from the past three months, more than two times higher. But this is more likely to be risk-driven than demand-driven.
Shadow fleet tankers to see more activity
With naphtha sources being limited, China will likely look to raise its imports of naphtha, and possibly other clean products, from Russia.
Russia’s top three clean petroleum product export destinations since January 2025 have been Türkiye, Brazil and China with 25.7%, 11.3% and 7.3% of CPP exports making their way to these countries, respectively.
China and Taiwan have consistently taken the lion’s share of Russia’s exports to Asia with China taking in 28.2% and Taiwan 24.7% of Russia’s 174m discharged barrels into Asia since January 2025.
Looking at Asia as a whole, and accounting for geopolitical sensitivities, shadow fleet tankers will likely be best poised to capitalise on the absence of the MEG with China looking to replace lost barrels with Russian product.
India could also raise its imports of Russian origin CPP in the coming weeks, after the US on Friday granted a 30-day general import license. But this will be limited to product that is already in floating storage.
South Korea and Japan are also unlikely to look at Russian clean products, with imports only accounting for less than 2% of Asia’s total imports.
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