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Tanker Market Enjoys Bull Run in December

The tanker market enjoyed a solid growth run during the month of December with Aframaxes posting the biggest gains, OPEC said in its latest monthly report.

The tanker market experienced a general strengthening trend in December as freight rates in both the dirty and clean segments of the market increased. On average, dirty tanker spot freight rates rose by 29% from the previous month on the back of increased tonnage requirements, tonnage tightening and high bunker prices. Enhanced market activities were seen to drive rates higher in all areas, affecting all tanker sectors in the market. Moreover, dirty freight rates are expected to continue climbing into the first quarter of 2020, reflecting the cost of new low-sulphur bunker fuel required to meet regulations effective 1 January 2020. In the clean market, an increase in activity prevailed in the different classes, leading to an increase in average clean tanker spot freight rates by 18% in December from the month before.

Spot fixtures

Global spot fixtures fell in December from the previous month’s levels, declining by 1.72 mb/d, or 8.6% m-o-m, with all areas contributing to losses. Fixtures also came in below the robust levels seen last year, down 2.3 mb/d, or 11.2%, from the same month a year ago.

OPEC spot fixtures averaged 12.41 mb/d in December, some 12%, or 1.7 mb/d, lower than in the previous month, and 13%, or 1.80 mb/d, lower y-o-y. Middle East-to-East fixtures were also lower, edging down 17% to 6.7 mb/d. Compared with the same month last year, rates on the route fell by 16.6% or 1.33 tb/d. Fixtures from the Middle East-to-West fell by more than 9%, or 150 tb/d, to average 1.46 mb/d in December, down by 3.5% y-o-y. Outside of the Middle East, fixtures averaged 4.24 mb/d in December, a decrease of 170 tb/d, or 3.9%, from the previous month, and fell 420 tb/d, or 9%, compared with the same month last year.

Sailings and arrivals

OPEC sailings declined by 1.6%, or 410 tb/d, m-o-m in December to average 25.10 mb/d. Sailings from the Middle East were 3.6%, or 680 tb/d, lower to average 18.02 mb/d in December. Crude arrivals were mixed in December. Arrivals in North America and West Asia declined by 150 tb/d m-o-m each, or 1.6% and 3.4%, respectively, in percentage terms. Arrivals in North America were 4% lower y-o-y, while those in West Asia were 1.8% higher over the same period.

Elsewhere, arrivals in Europe and the Far East rose by 3.1% and 2.8%, or or 360 tb/d and 230 tb/d, m-o-m, respectively. At 12.01 mb/d, arrivals in Europe were 5.0%, or 570 tb/d, higher than the same month last year, while arrivals in the Far East were 1.6%, or 140 tb/d, lower than the same level a year ago.

Dirty tanker freight rates

Very large crude carriers (VLCCs)
VLCC spot freight rates in December moved back toward the high levels seen two months ago, erasing some of the losses seen in November to end the year on a stronger note than in the previous year. Gains were seen across the selected routes. At WS113 points, the Middle East-to-East was up 23% in December compared with the previous month. Y-o-y, rates on the route were also 29% higher those seen in December 2018. Freight rates registered for tankers operating on the Middle East-to-West routes in December were up 12% m-o-m. At WS63 points, rates on the route were also 64% higher than the same month last year. West Africa-to-East routes in December also showed a similar pattern, up 15% m-o-m to stand at WS108 points, representing a gain of 25% compared with December 2018.

Suezmax average spot freight rates in December recovered roughly half the losses seen in the prior month, which followed a spike in rates in October. Y-o-y, Suezmax rates were 20% higher than the same momth last year. Rates for tankers operating on the West Africa-to-US Gulf Coast (USGC) route averaged WS142 points, representing a m-o-m increase of 33% in December, and 28% higher than the levels seen in December 2018. The Northwest Europe (NWE)-to-USGC route rose by 16% m-o-m to average WS104 points, which was some 10% higher y-o-y.

The Aframax sector enjoyed the biggest monthly gains in December. The Indonesia-to-East route was 35% higher to average WS185 points, representing a gain of 34% y-o-y. The intra-Mediterranean route was up 28% to average WS199 points, still 2% higher than in December 2018. The Mediterranean-to-NWE route was also 20% higher m-o-m to average WS181 points, but remained 1.0% lower y-o-y.

The Caribbean-to-US East Coast (USEC) route experienced a sharp gain in December compared with the previous month. Rates averaged WS249 points, which was around 61% higher m-o-m and up 33% y-o-y.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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