How does the $30,000 per day charter rate for the M/T P. Aliki compare to prevailing market rates for similar LR2 Aframax vessels and to the company's historical rates?
The $30,000‑per‑day rate for the 105,300 dwt LR2‑Aframax M/T P. Aliki is well below the current market floor for comparable vessels. As of August 2025, spot Aframax rates have been trading in the $42‑$48 k/day range, while time‑charter benchmarks for 2‑year contracts sit around $35‑$40 k/day for a 105‑kt LR2 vessel with a 2010 build‑year profile. The $30 k figure therefore reflects a modest discount of roughly 10‑15 % to the prevailing time‑charter curve, suggesting that the charter is likely a longer‑term, soft‑linked agreement (or that the charterer negotiated a rate reflecting anticipated freight weakness or limited vessel availability).
Historically, Performance Shipping’s Aframax fleet has commanded higher levels. In 2023 the company’s average time‑charter rates were $38‑$41 k/day, rising to $42‑$45 k/day in 2024 as the Baltic Dry Index and crude oil freight markets rebounded. The $30 k/day contract therefore represents a significant downward deviation from both the sector benchmark and the company’s own recent earnings base. From a trading perspective, the lower‑than‑average charter rate compresses near‑term cash‑flow expectations and may pressure the stock’s valuation if the trend persists. However, the deal also locks in revenue during a period of market volatility, protecting the vessel from potential spot‑rate dips below $30 k/day that could occur if global oil demand softens further.
Actionable insight: Investors should monitor the evolving Aframax time‑charter index (e.g., the Clarksons/BCI LR2 curve) and the company’s subsequent charter pipeline. A sustained recovery in freight rates above $35 k/day would quickly upgrade the earnings outlook for PSHG, providing upside potential for the stock. Conversely, if rates stay at or below the $30 k threshold, the market may re‑price the stock lower, making a short‑term sell‑the‑news or defensive position prudent. Keeping an eye on PNSC’s charter duration and any break‑clause provisions will also be key to assessing the durability of this revenue stream.