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Tanker Market Mixed During August

The tanker market showed mixed performance during the month August. According to OPEC’s monthly report, dirty spot freight rates for very large crude carriers (VLCCs) showed mixed movements in August, while Suezmax and Aframax rates experienced declines on all monitored routes. Softer seasonal demand resulted in a general downward drift in rates. VLCC spot freight rates enjoyed some strength early in the month before moving lower by the end of August, although with varying movements depending on the region. On the Middle East-to-East route, spot freight rates were unchanged, m-o-m, while rates on the Middle East-to-West route fell 3%, and spot rates on the West Africa-to-Europe route rose 2%, m-o-m. In the Suezmax market, spot rates experienced a m-o-m decline on all monitored routes, despite a pickup in rates toward the end of the month when the market balance improved. The US Gulf Coast-to-Europe route led declines, falling 23%, m-o-m. Aframax rates on the Caribbean-to-US East Cost route declined 41%, m-o-m, while the rates on the CrossMediterranean (Med) route declined by 11%, impacted by reduced tanker demand from North Africa. The clean market was weighed down by softening seasonal activity. Spot freight rates showed further m-o-m declines, falling 33% East of Suez and 24% West of Suez.

Spot fixtures

Global spot fixtures edged higher in August, with moderate gains on all monitored routes except outside the Middle East. Global fixtures averaged 14.0 mb/d for the month, representing an increase of 1.0 mb/d, or about 8%, m-o-m. Compared with August 2023, global spot fixtures were close to 3.2 mb/d, or about 29%, higher. OPEC spot fixtures averaged 9.6 mb/d in August, representing an increase of just under 0.2 mb/d, or 2%, m-o-m. Compared with the same month last year, fixtures rose 2.2 mb/d, or just over 30%. Middle East-to-East fixtures increased by 0.1 mb/d, or about 2%, m-o-m, to average 6.1 mb/d. Y-o-y, fixtures on the Middle East-to-East route were 2.0 mb/d, or 50%, higher. Spot fixtures on the Middle East-to-West route rose 0.3 mb/d, or 44%, m-o-m, to average just under 1.0 mb/d. However, compared with the same month last year, fixtures were still down 0.3 mb/d, or 22%, y-o-y. In contrast to other routes, spot fixtures on routes outside the Middle East declined, falling 0.2 mb/d, or about 8%, m-o-m, to average 2.5 mb/d. Compared with the same month in 2023, fixtures still managed an increase of 0.5 mb/d, or 24%.

Sailings and arrivals

OPEC sailings increased by 1.4 mb/d, or about 7%, m-o-m, to average 21.6 mb/d in August. Compared with the same month in 2023, OPEC sailings were 1.5 mb/d, or over 7%, higher. Middle East sailings were broadly flat, m-o-m, averaging 16.4 mb/d in August. Y-o-y, sailings from the region declined negligibly. Crude arrivals continued to increase both East and West of Suez. North American arrivals rose by about 0.1 mb/d, or less than 1%, to average 10.2 mb/d. Compared with August 2023, they were 0.9 mb/d, or almost 10%, higher. Arrivals to Europe increased by 0.3 mb/d, or more than 2%, m-o-m, to average 13.3 mb/d. Compared with the same month in 2023, they were 0.8 mb/d, or 6%, higher.
Far East arrivals averaged 16.3 mb/d in August, representing a gain of 1.8 mb/d, or over 12%. Y-o-y arrivals in the region were 0.8 mb/d, or about 5%, higher. Arrivals in West Asia increased, m-o-m, to average 7.3 mb/d, representing a gain of 0.2 mb/d, or more than 3%, in August. However, compared with the same month last year, arrivals in the region were down 1.2 mb/d, or 14%.

Dirty tanker freight rates

Very large crude carriers (VLCC) VLCC spot freight rates demonstrated some strength early in the month before moving lower by the end of August, although with varying movements depending on the region. Taken together, average VLCC spot freight rates were unchanged, m-o-m, and about 7% higher compared with the same month in 2023. On the Middle East-to-East route, rates continued to average WS50 in August, unchanged from the previous month. This represents a y-o-y increase of 9%. In contrast, rates on the Middle East-to-West route fell 3%, m-o-m, in August, to average WS33. Compared with the same month in 2023, rates on the route were 6% higher.

West Africa-to-East spot rates, however, showed the best performance among monitored routes, rising 2%, m-o-m, to average WS55 in August. Compared with the same month in 2023, rates gained 6%.

Suezmax

Suezmax spot rates experienced a m-o-m decline on all monitored routes, despite a pickup in rates toward the end of the month, as the tanker market balance improved. Rates showed the strongest m-o-m decline on average of the three monitored vessel classes, falling 21% in August. However, rates were still 11% higher than the same month in 2023. On the West Africa-to-US Gulf Coast (USGC) route, spot freight rates in August averaged WS73, following a decline of 19%, m-o-m. Spot rates were still 14% higher compared with the same month in 2023. Rates on the USGC-to-Europe route dropped 23%, m-o-m, to average WS63. Compared with the same month in 2023, they were 7% higher.

Aframax

Aframax spot freight rates also experienced declines across all monitored routes. On average, Aframax rates fell 19%, m-o-m, while y-o-y rates were still 20% higher. Rates on the Indonesia-to-East route declined for the second consecutive month in August, down 10%, m-o-m, to average WS141. This represented a gain of 19% compared to the same month last year.

Spot rates on the Caribbean-to-US East Coast (USEC) route experienced the sharpest decline, dropping 41%, m-o-m, to average WS111 in August. Rates remained 2% higher compared with the same month in 2023. Cross-Med spot freight rates fell 11%, m-o-m, to average WS126. Compared with the same month last year, spot rates on the route were still 26% higher. Rates on the Med-to-Northwest Europe (NWE) route averaged WS120, representing a decline of 8%, m-o-m, while compared with the same month in 2023, rates were 36% higher.

Clean tanker freight rates

Clean spot freight rates fell both East and West of Suez in August. East of Suez rates saw the strongest decline, down 33% on aggregate, while West of Suez rates fell 24%. These declines brought clean freight rates below year-ago levels, with East of Suez rates down 13%, y-o-y, and West of Suez rates 20% lower than the same month in 2023.

Rates on the Middle East-to-East route declined 31%, m-o-m, to average WS137 in August. Compared with the same month in 2023, rates were 11% lower. Clean spot freight rates on the Singapore-to-East route dropped 34%, m-o-m. Rates on the route averaged WS151, representing a 15% decline compared with the same month in 2023. Spot freight rates on the NWE-to-USEC route fell 24%, m-o-m. Rates averaged WS145, which represents a 22% loss compared with August 2023. Rates around the Mediterranean gave up the gains seen in the previous month. Rates on the Cross-Med route lost 24%, m-o-m, to average WS154 and were down 19%, y-o-y. Rates on the Med-to-NWE route fell 23%, m-o-m, and declined 18%, y-o-y, to average WS164.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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