Tanker Market in “Lethargic” Mode During September
Global spot fixtures declined m-o-m in September, falling by 0.4 mb/d, or close to 3%, m-o-m to average 13.8 mb/d. The decline comes as a build-up in inventories earlier in the year weighed on crude trade flows and as the impact on tonnage demand was further exacerbated by historic supply adjustments. Spot fixtures were some 5.7 mb/d, or 29%, lower than the same month last year.
OPEC spot fixtures averaged 9.6 mb/d in September, edging up around 1% m-o-m, but still some 3.6 mb/d, or 27%, lower compared with the same month last year. Fixtures from the Middle East-to-East picked up further in September, rising by 3%, or 0.2 mb/d, m-o-m to average 5.8 mb/d, amid continued strong inflows, particularly to China. Y-o-y, this represented decline of 2.3 mb/d, or 29%. In contrast, Middle East-to-West fixtures dropped by 0.3 mb/d, or 26%, m-o-m in September, as refinery runs remain depressed in the Atlantic Basin due to high product inventories and some lingering storm disruptions. Fixtures on the route averaged 0.8 mb/d, down 0.3 mb/d, or 30% mb/d, compared with the same month last year. Outside of the Middle East, fixtures rose by 0.2 mb/d, or 8%, m-o-m to average just under 3.0 mb/d. In annual terms, fixtures were down by 0.9 mb/d, or 23%.
Sailings and arrivals
OPEC sailings edged by less than 1% m-o-m, in September, averaging 20.1 mb/d, compared with a high in April of 25.5 mb/d. This slight increase was due to the return of some additional adjustments to the market, partly offset by compensatory reductions by other producers. Y-o-y, OPEC sailings were 4.3 mb/d, or 18%, lower. Middle East sailings averaged 14.3 mb/d, representing a decline of 0.2 mb/d, which was more than 1% m-o-m, but a decline of 3.6 mb/d or just shy of 20% y-o-y. Crude arrivals were mixed in September. Arrivals in West Asia saw the biggest m-o-m increase in percentage terms, rising by 0.2 mb/d, or around 4%, m-o-m to average 4.7 mb/d. Far East arrivals rose by 0.2 mb/d, or 2%, m-o-m to average 8.4 mb/d in September. North America led declines in September, falling by 3%, or 0.2 mb/d, m-o-m to average 7.7 mb/d, impacted by hurricane disruptions on top of already low refinery runs. Arrivals in Europe declined by less than 1%, or 0.1 mb/d, m-o-m to average just under 10 mb/d. Y-o-y, arrivals were 17% lower on the route.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates continued to edge lower in September, slipping by 8% m-o-m on average, as tonnage demand continued to be weak and the unwinding of floating storage increased availability. Preliminary indications point to a continued decline in October and a soft outlook for the final quarter of the year, after a very profitable first half of the year. Rates on the Middle East-to-East route fell a further 8% m-o-m in September to average WS30 points. Y-o-y, rates were more than 50% lower compared with the same month last year. The Middle East-to-West route was also 8% lower m-o-m to average WS21 points. Y-o-y, rates were 31% lower. Rates also dropped on the West Africa-to-East route, decreasing by 7% m-o-m to average WS34 points and down 46% compared with September 2019.
Suezmax rates declined in September, with average spot freight rates dropping 19% m-o-m on average in September. Rates were 46% lower y-o-y. Suezmax demand remained muted during a period when activity normally starts to pick up due to seasonal factors. On the West Africa-to-US Gulf Coast (USGC) route, Suezmax rates averaged WS32 points in September, down 23% from the month before. Y-o-y, rates were 53% lower than in September last year. The Northwest Europe (NWE)-to-USGC route fell by 15% m-o-m to average WS32 points, representing a 36% decline from the same month last year.
Aframax rates declined in September, down by 7% m-o-m, and lower by 47% y-o-y. Overall, activity remained sluggish, weighing on rates amid ample availability. The Caribbean-to-US East Coast (USEC) exhibited the largest m-o-m losses in percentage terms, declining by 18% to average WS57, some 58% lower y-o-y.
The Mediterranean-to-NWE route declined by 5% m-o-m to average WS53, while the Cross-Med route fell a similar 5% m-o-m to average WS57. Y-o-y, rates were around 50% lower on both routes. The Indonesia-toEast route edged down 1% m-o-m in September to average WS70 and was 24% lower y-o-y.
Clean tanker freight rates
Clean spot freight rates were the only bright spot in September, showing a 16% improvement m-o-m, while still remaining 7% below the same month last year. Gains were due solely to clean spot freight rates West of Suez, where they were up 32% m-o-m in September and were 15% higher y-o-y. Rates on the Cross-Med and Med-to-NWE routes jumped 52% and 45% m-o-m to average WS125 and WS135 points, respectively, due to low availability in the region early in the month. Meanwhile, rates on the NWE-to-USEC route contributed a slight gain of 2% m-o-m to average WS99 points. In contrast, clean tanker spot freight rates East of Suez dropped by 8% m-o-m in September 2020 and were 35% lower compared with September 2019. The Middle East-to-East route declined by 15% m-o-m to average WS72 points. The Singapore-to-East route edged down by 2% m-o-m to average WS90. Y-o-y, rates on the route were 35% lower.
Nikos Roussanoglou, Hellenic Shipping News Worldwide