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Tanker Market: A Mixed Bag During May

The tanker market showed a mixed bag of results over the past month. According to the latest monthly report from OPEC, dirty spot freight rates showed mixed movement in May, with VLCCs and Aframax generally improving while Suezmax experienced a decline, m-o-m. VLCC spot freight rates on the Middle East-to-East route rose by 10%, m-o-m, while the West Africa-toEast route rose by 11%. Aframax rates around the Mediterranean rose by 10% in May, while the Indonesiato-East route was up 6%. In contrast, Suezmax spot freight rates declined, dropping by 8%, m-o-m, on the US Gulf Coast (USGC)-to-Europe route. Rates for clean tankers were higher across all monitored routes in May, with East of Suez rates up by 10% and West of Suez rates gaining 3%.

Spot fixtures

Global spot fixtures increased in May, with fixtures increasing by almost 3.5 mb/d, or about 38%, m-o-m, to average 12.9 mb/d. However, compared with May 2023, global spot fixtures were down by 0.8 mb/d, or about 6%. OPEC spot fixtures averaged just under 9 mb/d in May, representing an increase of 2.4 mb/d, or 36%. Compared with the same month last year, fixtures declined 0.3 mb/d, or 4%. Middle East-to-East fixtures rose 1.3 mb/d, or almost 29%, to average 5.7 mb/d. Compared with the same month in 2023, fixtures on the Middle East-to-East route were about 1.0 mb/d, or over 22%, higher. Spot fixtures on the Middle East-to-West route increased by 0.1 mb/d, or about 15%, m-o-m, to average 0.8 mb/d. However, compared to the same month last year, fixtures were down 0.5 mb/d, or 39%, y-o-y. Fixtures on routes outside the Middle East rose 1.0 mb/d, or 66%, m-o-m, to average 2.6 mb/d. Compared with the same month of 2023, fixtures were 0.9 mb/d, or 26%, lower.

Sailings and arrivals

OPEC sailings declined by 0.4 mb/d, or about 2%, m-o-m, to average 20.7 mb/d in May. Compared with the same month in 2023, OPEC sailings declined 0.6 mb/d, or 3%. Middle East sailings declined by 1.6 mb/d, or almost 9%, m-o-m, to average 16.4 mb/d in May. Y-o-y sailings from the region were down 1.4 mb/d, or 8%.

Crude arrivals increased further in all monitored regions, except West Asia. North American arrivals rose 0.1 mb/d, or over 1%, to average 9.4 mb/d. Compared with May 2023, North American arrivals were about 0.4 mb/d, or close to 4%, higher. Arrivals to Europe increased by 0.3 mb/d, or about 3%, to average 12.8 mb/d.

Compared with the same month of 2023, arrivals to Europe were 1.0 mb/d, or 9%, higher. Far East arrivals rose by 0.4 mb/d, or about 3%, m-o-m, to average 17.2 mb/d in May. Y-o-y arrivals in the region were up by almost 2.5 mb/d, or over 17%. In contrast to the other regions, arrivals in West Asia declined, m-o-m, to average 8.9 mb/d, representing a decline of 0.4 mb/d, or about 5%, in May. However, compared to the same month last year, arrivals in the region increased by about 1 mb/d, or 12%.

Dirty tanker freight rates

Very large crude carriers

VLCC spot rates strengthened in May amid an improving performance both East and West of Suez. On average, VLCC spot freight rates rose 9%, m-o-m. Compared with the same month of 2023, VLCC rates were 36% higher. On the Middle East-to-East route, rates increased by 10%, m-o-m, to average WS68 points. This represents a y-o-y gain of 42%. Rates on the Middle East-to-West route rose 5%, m-o-m, in May to average WS44 points. Compared with the same month in 2023, rates on the route were 22% higher. West Africa-to-East spot rates increased 11%, m-o-m, to average WS70 points in May. Compared with the same month of 2023, rates were 43% higher.

Suezmax

In contrast to the other major tanker classes, Suezmax spot freight rates declined in May, falling 5%, m-o-m. They fell 11% compared with the same month of 2023. On the West Africa-to-USGC route, spot freight rates in May averaged WS102, representing a decline of 4%, m-o-m. Compared with the same month of 2023, spot rates were also 4% lower. Rates on the USGC-to-Europe route experienced an even stronger decline, falling 8%, m-o-m, to average WS84 points. Compared with the same month of 2023, they were 19% lower.

Aframax

Aframax spot freight rates were higher on all monitored routes, except the Caribbean-to-US East Coast (USEC). On average, rates rose 5%, m-o-m, but were 4% lower than in the same month of the previous year, when trade disruptions pressured Aframax rates in particular. Rates on the Indonesia-to-East route rose 6%, m-o-m, to average WS167 points in May. Compared with the same month of 2023, rates were 8% higher.

In contrast, spot rates on the Caribbean-to-USEC route declined 8%, m-o-m, to average WS157 points in May. Rates decreased 39% compared with the same month of 2023. Cross-Med spot freight rates gained 10%, m-o-m, to average WS202 points. This represents a 13% y-o-y increase. Rates on the Mediterranean-to-Northwest Europe (NWE) route rose 8%, m-o-m, to average WS190 points. Compared with the same month of 2023, rates were up 21%.

Clean tanker freight rates

Clean spot freight rates increased, supported by gains in both the East and West of Suez. East of Suez rates increased 10%, m-o-m, while West of Suez rates rose 3%. As a result, clean spot rates were 6% higher on average.

Rates on the Middle East-to-East route increased 12%, m-o-m, to average WS252 points in May. Compared with the same month in 2023, rates were 48% higher. Clean spot freight rates on the Singapore-to-East route rose 8%, m-o-m, to average WS273 points. This represents a 16% gain compared with the same month of 2023. Spot freight rates on the NWE-to-USEC route were 4% higher, m-o-m, to average WS187 points.

This represents a 23% increase compared with May 2023. Rates around the Mediterranean experienced relatively smaller relative gains, with the Cross-Med up 2%, m-o-m, to average WS255 points, and rates on the Med-to-NWE route increasing 2%, m-o-m, to average WS265 points. When compared with the same month of 2023, rates were over 72% higher on both routes.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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