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Tanker fixtures up in January, rates start picking up but trend seen shortlived

Saturday, 11 February 2012 | 00:00
In its latest report for the month of January, issued late this week, OPEC said that global fixtures increased by 15.6% in January, compared with the previous month. OPEC spot fixtures were up by 1.7 mb/d, or 16%, and averaged 12.4 mb/d, according to preliminary data. The gain in OPEC fixtures received support outside the Middle East. Fixtures from the Middle East averaged 12.4 mb/d in January, while, from outside that region, they averaged 4.2 mb/d, an increase of 1.3 mb/d. Compared with the same period a year earlier, global fixtures indicated growth of 16% in January. Preliminary data showed that OPEC sailings remained flat in January, averaging 23.3 mb/d. However, compared with the same month last year, they gained 0.4 mb/d, or 2%. January arrivals in all areas, except the Far East, gained ground over last month. North America and West Asia increased by 20 tb/d and 11 tb/d respectively, to average 8.8 mb/d and 4.6 mb/d. Europe remained flat, while the Far East declined by 13 tb/d.
Both dirty and clean tanker spot freight rates were bearish in January, compared with the previous month. The decline in dirty rates was experienced on all reported routes, except for VLCCs from West Africa to the US. In the clean market, rates on all reported routes declined both East and West of Suez. In the dirty tanker segment, VLCC spot freight rates declined by 4.4%, Suezmax rates retreated by 1.2% and Aframax rates decreased by 20.2%. In the clean tanker segment, East of Suez rates dropped by 19% and West of Suez declined by 12%. The decline in spot freight rates in January came mainly from the increase in Worldscale evaluations, which, at a rough average, rose by 18% on reported routes. However, compared with last year, average spot freight rates in nominal terms for both dirty and clean tankers showed improvements in January this year.
Spot freight rates for VLCCs operating from the Middle East to eastern destinations and from the Middle East to western ports declined by 5% in January, compared with the previous month. The drop in rates on both routes was driven mainly by the increase in the Worldscale flat rate on the back of higher bunker prices. Additionally, moderate Chinese tonnage demand, as many charterers went on holiday during the Chinese New Year, put further pressure on the decline in rates. Tonnage demand improvements from other Asian countries did not support rates closing higher from Middle East loading ports in January. Following a similar trend, rates for VLCCs operating on the long-haul route from West Africa to eastern destinations declined by 3% in January. Changing trade routes, where vessels load from the Middle East to the US and return laden from West Africa to the East, increased availability and put pressure on rates. Compared with the same month a year earlier, rates from the Middle East to the East, the Middle East to the West, and West Africa to the East showed increases of 19%, 16% and 16% respectively in January.
Suezmax spot freight rate developments in January followed the same pattern as VLCC rates, as average rates dropped by 1.2%, compared with the previous month. However, the rate for Suezmax operating on the West Africa-to-the-US route increased by 3%, the only spot rate that achieved an increase in January on all the reported routes. The rate for tanker sailings from NW Europe to the US decreased by 5%. The gain in West Africa-to-the-West was supported by ample tonnage demand and owner sentiment towards increasing February requirements from the US, while the loss in NW Europe-to-the-US came from pressure from limited transatlantic activity and plentiful tonnage in the Mediterranean.
Aframax spot freight rates experienced the biggest declines in January, compared with the previous month. The average rate fell by 20% on the reported routes. East of Suez, the rate on the Indonesia-to-the-East route declined by 14%. West of Suez, the Caribbean-to-the-US rate remained flat, while the Mediterranean-to-Mediterranean and Mediterranean-to-NW Europe rates declined by 32% and 31% respectively; these declines were driven by a build-up in tonnage supply and a reduction in delays in the Turkish Straits, as weather conditions improved. The increase in the Worldscale flat rate was the main reason for the steady state of rates for Aframax operating in the Caribbean in January, with support from increased activity and weather conditions. The decline in Indonesia-to-the-East rate came on the back of flat rate changes, as well as lower requirements from Japan.
Nikos Roussanoglou, Hellenic Shippping News Worldwide
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