Tanker Market Flat During August
The tanker market was broadly unchanged during the month August, according to the latest OPEC report. Dirty vessel spot freight rates were broadly flat in August as gains in VLCCs were outweighed by declines in average rates for Aframax and Suezmax. A pick up in tonne-mile demand and reduced deliveries supported the VLCC market at the start of the month before slowing activities allowed availability to build, capping gains. Clean tanker market spot freight rates remained under pressure with strong declines west of Suez offsetting an improvement east of Suez. The return of refineries from maintenance reduced the need for interregional trade flows.
Global spot fixtures edged lower in August, down by around 0.16 mb/d or 1% m-o-m and around 1.37 mb/d or 7% lower than the same month a year ago. Indeed, global spot fixtures have broadly underperformed compared to the previous year, as the seasonal rise in activity was insufficient to offset exiting availability.
OPEC spot fixtures also remained below y-o-y levels. In August, OPEC spot fixtures averaged 13.90 mb/d, marginally lower than the previous month and about 0.27 mb/d or 2% lower y-o-y. Fixtures from the Middle East-to-West averaged 1.28 mb/d in August, representing a drop of 28% m-o-m and 36% y-o-y. The decline in crude flows to North America has been the one of the key contributors to this decrease, as burgeoning US crude supply dampened the need for inflows from outside the region. In contrast, fixtures on the Middle East-to-East route increased 0.62 mb/d or 8% in August to 8.21 mb/d. Annually, fixtures on the route were some 0.35 mb/d or 4% higher than last year’s levels. New refinery capacity in China and the return of Asian refineries from maintenance helped support the y-o-y and m-o-m increase. Outside of the Middle East fixtures averaged 4.41 mb/d in August, a decline of 0.22 mb/d or 4.7% from the previous month but an increase of 0.11 mb/d or 2% compared to the same month last year.
Sailings and arrivals
OPEC sailings rose 0.5% m-o-m in August to average 24.72 mb/d, but were down 0.2% y-o-y. Sailings from the Middle East increased 2.5% or 0.44 mb/d m-o-m and gained 1.2% or 0.22 mb/d compared to the same month last year. In monthly terms, crude arrivals in August declined in all regions except West Asia, but showed gains in annual terms in all regions except North America. Arrivals in the Far East declined 0.25 mb/d or 2.7% m-o-m but were 0.13 mb/d or 1.5% higher y-o-y. Arrivals in Europe declined by 0.06 mb/d or around 0.5% m-o-m, but were 0.20 mb/d or 1.7% higher y-o-y. Arrivals in North America declined by 0.06 mb/d or 0.6% m-o-m and fell by a stronger 0.73 mb/d or 6.9% y-o-y. Arrivals in West Asia were flat m-o-m in August at 4.47 mb/d. This partly reflects crude flows to India which have held rather stable so far this year.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot freight rates rose in August with gains across all routes. Middle East-to-West saw an increase of 35% m-o-m to stand at WS27 points in August. Freight rates registered for tankers operating on the Middle East-to-East route rose 30% compared to the previous month, to stand at WS57 points in August. West Africa-to-East also showed gains in August, increasing 24% from a month ago, to average WS58 points.
Suezmax average spot freight rates fell further in August. The decline came from tankers operating on the West Africa-to-US Gulf Coast (USGC) route, which saw an 5% drop in spot freight rates to average WS57. This was sufficient to outweigh a gain in Northwest Europe-to-USGC rates, which recovered from the losses seen in the previous month, to stand at WS47 points
The Aframax sector declined further on most routes in August, with only the Caribbean-to-US East Coast managing to avoid a loss, remaining flat at WS75 points. Both the intra-Med and Med-to-Northwest Europe dropped by 13%. The Indonesia-to-East route slipped 5% to average WS88 points.
Clean tanker freight rates
Clean spot tanker freight rates showed diverging trends in August, with West of Suez losses overwhelming smaller gains East of Suez. Average spot freight rates West of Suez declined 28% on average as the return of refineries from maintenance left local product markets well supplied. The Mediterranean-to-Mediterranean led losses with a decline of 33% to WS103 points, followed by the Med-to-Northwest Europe route which came in a close second with a decline of 32% to WS111. Average rates on the Northwest Europe-to-US East Coast route fell 16% to WS99. To the East of Suez, clean tanker freight rates rose around 8% in August from the previous month to WS112, with the Middle East-to-East route increasing by 17% to average WS112 points and Singapore-toEast route slightly higher at WS131.
Nikos Roussanoglou, Hellenic Shipping News Worldwide