Home / Shipping News / Hellenic Shipping News / Tanker Market: October Showed Some Positive Momentum

Tanker Market: October Showed Some Positive Momentum

Dirty tanker spot freight rates continued to show some positive momentum in October, with gains across all classes, OPEC said in its latest monthly report. Rates benefited from a general pick-up in activity starting at end-September. VLCCs and Suezmax enjoyed the highest rates so far this year, with average gains of 16% and 29% m-o-m respectively, while Aframax rates were up 22% m-o-m. For VLCCs, the Middle East-to-East route averaged WS42, up 17% m-o-m. For Suezmax, the West Africa-to-US Gulf Coast averaged WS65 for a gain of 35%. Meanwhile, clean tanker spot rates also strengthened, as a 22% gain in West of Suez offset a 6% decline in the East. The tanker market is expected to see a continued improving performance through the end of the year as concerns regarding a winter energy crunch in the power sector as well as a pick-up in economic activity supports tonnage demand for crude and products. However, higher bunker costs will limit earnings.

Spot fixtures
The latest estimates show global spot fixtures declined in October after a strong performance in September. Fixtures averaged 14.54 mb/d, representing a decline of 1.7 mb/d, or 10% m-o-m. Compared to the previous year, spot fixtures were 0.3 mb/d, or around 2%, lower.

OPEC spot fixtures declined m-o-m in October, falling by close to 1.6 mb/d, or around 14% m-o-m, to average 9.52 m/b. Compared with the same month last year, OPEC spot fixtures were about 0.4 mb/d, or around 4%, lower. Middle East-to-East fixtures declined by 1.3 mb/d, or almost 20%, m-o-m to average 5.7 mb/d. This was a decline of around 0.3 mb/d, or more than 4%, compared to the same month last year. Fixtures from the Middle East-to-West saw an increase in October, rising 0.3 mb/d, or 37%, m-o-m to average 1.2 mb/d. However, the route was around 3% lower compared to the same month last year. Outside the Middle East, fixtures declined by 0.6 mb/d, or 18%, m-o-m to average 2.7 mb/d in October. Y-o-y, fixtures were around 2% lower.

Sailings and arrivals
OPEC sailings edged up marginally m-o-m in October to average 22.4 mb/d. Y-o-y, OPEC sailings were 1.4 mb/d, or about 7%, higher than in the same month last year. Middle East sailings fell back m-o-m in October, declining by 0.3 mb/d, or about 2%, to average 16.3 mb/d. Y-o-y, sailings from the region rose 0.9 mb/d, or around 6%, compared with the same month last year.

Crude arrivals in October declined after the end of the driving season in the west, but picked up in the east. Arrivals in North America fell by 0.3 mb/d, or around 3%,m-o-m to average 8.8 mb/d. Compared with the same month last year, arrivals were 0.9 mb/d, or 12%, higher. Arrivals in Europe were relatively steady m-o-m in October, averaging 12.6 mb/d, but 2.6 mb/d, or 26%, higher than the same month last year. In the Far East, arrivals increased by 0.6 mb/d, or around 5%, m-o-m to average 13.6 mb/d. Y-o-y, arrivals were 3.9 mb/d, or around 40%, higher. West Asia arrivals rose by 0.3 mb/d, or 4% m-o-m, in October to average 7.3 mb/d, representing an increase of 2.1 mb/d, or amost 40%, compared to the same month last year.

Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates saw some welcome momentum in October, gaining 16% m-o-m, with improvements across all major routes, supported by preparations for seasonal heating demand. Y-o-y, VLCC rates were up by 44% over the poor performance seen in the previous year. Rates on the Middle East-to-East route rose 17% m-o-m to average WS42 points, posting the secondconsecutive month of gains. Y-o-y, rates were 56% higher. Rates on the Middle East-to-West route also continued moving higher, gaining 9% in October to stand at WS24 points amid steady flows to the US. Y-o-y, rates were 33% higher. The West Africa-to-East route also built momentum, gaining 19% m-o-m in October to average WS44 with some spillover from the improving Suezmax market into the Atlantic Basin. Rates were 47% higher compared with October 2020.

Suezmax rates also surged ahead in October, rising by 29% m-o-m, supported by an improving tonnage demand out of West Africa. Rates were 138% higher compared to the exceptional lows seen in the same month last year. On the West Africa-to-USGC route, rates jumped 35% m-o-m to average WS65, driven by rising tonnage demand in the region. Rates were 150% higher than the exceptional lows seen in October 2020. Spot freight rates on the USGC-to-Europe route showed strong gains for the second month in a row, surging 20% m-o-m to average WS59 points. This was a 127% gain compared to the same month last year.

The rise in Aframax rates accelerated in October, increasing 22% m-o-m on average as a general lift in the tanker market boosted demand amid increased demand for dirty products in the power sector. Y-o-y, rates were 104% higher. The Indonesia-to-East route recovered most of the previous month’s losses in October to rise by 10% m-o-m for an average of WS98, which was 78% higher than in the same month last year. The Caribbean-to-USEC route rose by 24% m-o-m to average WS130, while rates were 183% higher y-o-y.

Med routes also enjoyed robust gains October. The Cross-Med route averaged WS109 in October, representing an increase of 22% compared with the previous month. Y-o-y, rates were 82% higher. On the Mediterranean-to-NWE route, rates saw bigger gains, rising by 29% m-o-m, to average WS103. Compared with the same month last year, rates on the route were 87% higher.

Clean tanker freight rates
Average clean spot freight rates saw mixed movements in October. Strong gains West of Suez outpaced softer declines on East of Suez routes to show an average increase of 9%. Rates in the west jumped 22% m-o-m, while East of Suez rates slipped 6% m-o-m for the second straight monthly loss.

In the West of Suez market, rates on the NWE-to-USEC route rose 10% m-o-m to average WS112 points. Compared to the same month last year, rates were 44% higher.

Rates on the Cross-Med and Med-to-NWE routes increased by 26% and 27%, respectively, to average WS145 and WS154 points. Y-o-y, rates were up by more than 100% in both markets. In the East of Suez, rates on the Middle East-to-East route were flat at WS114, but were up by 70% y-o-y. Freight rates on the Singapore-to-East route declined by 10% m-o-m to average WS139. Rates were still 36% higher compared with October 2020.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping