2021 Ends With Tanker Market in Dire Straits
The latest estimates show global spot fixtures fell in December, dropping for the third-straight month. Fixtures averaged 13.94 mb/d, representing a decline of just under 1.0 mb/d, or around 6%. The drop was driven by the fall in Middle East-to-West fixtures, as an increase was seen to the East and outside the Middle East. Compared to the previous year, spot fixtures were 2.4 mb/d lower, or around 15%.
Spot fixtures from the Middle East-to-West plunged by 25% m-o-m in December, down 0.2 mb/d in volume terms, to average 0.6 mb/d. Y-o-y, rates were around 0.2 mb/d, or over 23%, lower. In contrast, OPEC spot fixtures rose m-o-m in December, increasing 0.7 mb/d, or around 7%, to average 9.63 m/b. However, compared with the same month in 2020, OPEC spot fixtures were about 0.6 mb/d, or 6%, lower. Middle East-to-East fixtures increased m-o-m by 0.3 mb/d, or around 5%, to average 5.9 mb/d. This was a marginal decline of less than 1% compared to the same month of 2020. Outside the Middle East, fixtures rose 0.6 mb/d m-o-m, or more than 21%, to average 3.2 mb/d in December. Y-o-y, fixtures were down around 0.4 mb/d, or around 11%.
Sailings and arrivals
OPEC sailings increased m-o-m in December to average 22.5 mb/d, a rise of more than 0.4 mb/d or 2%. Compared to the same month of the previous year, OPEC sailings declined by 0.2 mb/d or less than 1%. Middle East sailings rose m-o-m in December, up by about 0.8 mb/d, or around 5%, to average 17.2 mb/d. Y-o-y, sailings from the region rose 1.0 mb/d, or around 6%, compared with December 2020. Crude arrivals were mixed in December. Arrivals in North America declined slightly to average 9.0 mb/d. However, compared with the same month of 2020, North American arrivals were 1.6 mb/d, or over 21%, higher. Arrivals in Europe were unchanged m-o-m in December, averaging 12.8 mb/d, but this was almost 2.8 mb/d, or 28%, higher than in the same month of 2020. In the Far East, arrivals increased m-o-m by 0.3 mb/d, or around 2%, to average 15.3 mb/d. Y-o-y, arrivals were 4.5 mb/d, or around 41%, higher. West Asian arrivals showed the biggest m-o-m gain in December increasing by around 0.9 mb/d, or 11%, to average 9.0 mb/d. This represented a y-o-y gain of 2.9 mb/d, or over 48%, compared to the same month in 2020.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
The anticipated year-end upward momentum failed to materialize in December, with VLCC spot rates fading from the modest gains seen the month before. On average, VLCC spot freight rates declined 5% m-o-m, with rates to the west remaining flat for the third consecutive month and rates to the east moving lower. However, y-o-y, VLCC rates in December were up 21% compared with the very poor performance seen in the same month in 2020. Rates on the Middle East-to-East route declined 7% m-o-m to average WS40 points. Y-o-y, rates were 18% higher than the torpid levels seen in 2020. Rates on the Middle East-to-West route were unchanged m-o-m, averaging WS24 points. Y-o-y, rates were 20% higher. The West Africa-to-East route dropped 9% m-o-m to average WS41 in December. Rates were 17% higher compared with December 2020.
Suezmax rates showed the best performance amongst the classes, increasing 7% m-o-m. This was largely due to a stronger – though still historically weak – performance in the Atlantic Basin in early December. Rates were 82% higher than the exceptional lows seen in December 2020. Rates on West Africa-to-USGC route recovered some of the previous month’s loss, edging up 2% m-o-m to average WS62. Compared to the same month of 2020, rates were 88% higher. Spot freight rates on the USGC-to-Europe route experienced a better performance from the perspective of ship owners, gaining 11% m-o-m to average WS62 points. This was 77% higher than in the same month of 2020.
Aframax rates slipped at the end of the year, declining 3% m-o-m in December, although y-o-y, rates were still 88% higher. The Indonesia-to-East route edged lower m-o-m in December, declining 2% to average WS103. Y-o-y, rates on the route were still 102% higher. Med routes continued their recent fall in December, dropping around 10% m-o-m, with the Cross-Med route averaging WS105 and the Mediterranean-to-NWE route averaging WS94. Compared with the same month of the previous year, rates on both routes were around 76% higher.
The Caribbean-to-US East Coast (USEC) route was a bright spot for ship owners. Rates increased 8% m-om to average WS134. Y-o-y, rates were 94% higher.
Clean tanker freight rates
Average clean spot freight rates jumped m-o-m in December, up 35%, driven primarily by a strong performance West of Suez, particularly around the Mediterranean. Clean rates in the west increased 53% m-o-m, while East of Suez rates rose 5% m-o-m.
In the East of Suez, rates on the Middle East-to-East route averaged WS129, representing a m-o-m gain of 9% and a 30% increase y-o-y. Freight rates on the Singapore-to-East route edged up 1% m-o-m to average WS139. Rates were 11% higher compared with December 2020.
In the West of Suez market, rates on the NWE-to-USEC route rose 31% m-o-m to average WS171 points. Compared to the same month of 2020, rates have more than doubled. Rates in the Cross-Med and Med-to-NWE surged m-o-m, gaining 60% 64%, respectively, to average WS240 and WS250 points. Y-o-y, rates have more than doubled on both routes.
Nikos Roussanoglou, Hellenic Shipping News Worldwide