Tanker Market On the Back Foot in August
Global spot fixtures remained muted m-o-m in August, declining 0.4 mb/d, or 3%, to average 13.4 mb/d. Spot fixtures were some 5.9 mb/d, or 30%, compared to the same month last year. This represents the change of fortunes in the tanker market relative the last year, as COVID-19 disruptions continue to weigh on demand amid high inventories in major demand centres.
OPEC spot fixtures averaged 9.68 mb/d in August, an increase of 0.7 mb/d, or 7%, from the previous month, as some spare capacity returned back to the market. Y-o-y, OPEC spot fixtures averaged 3.9 mb/d, representing a decline of 28%, reflecting production adjustments taken in response to the collapse in demand seen since April. After declining considerably over the previous months, fixtures from the Middle East-to-East rose 13%, or 0.7 mb/d, m-o-m in August to average 6.1 mb/d. Y-o-y, this represented decline of 2.0 mb/d, or 24%. Middle East-to-West fixtures experienced a similar trend, increasing 36% m-o-m in August. Fixtures on the route averaged 0.9 mb/d, down 0.4 mb/d compared to the same month last year. Outside of the Middle East, fixtures fell 10% m-o-m to average 2.7 mb/d. In annual terms, fixtures were down 1.6 mb/d, or 37%.
OPEC sailings picked up m-o-m following three months of steep declines, averaging 20.5 mb/d in August, compared to a high in April of 25.5 mb/d. M-o-m, OPEC sailings rose 0.7 mb/d, or 4%, but were down 4.2 mb/d compared to August 2019. Middle East sailings averaged 15.1 mb/d, representing an increase of 1.6 mb/d, or around 12% m-o-m, but a decline of 2.9 mb/d, or 16% y-o-y.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates continued to edge lower in August, slipping 15% m-o-m on average, as sluggish exports lengthened tonnage lists. Rates on the Middle East-to-East route led m-o-m losses in August, down 18% m-o-m to average WS33 points, and declined 43% compared to the same month last year. The Middle East-to-West route fell by around 10% to average just below WS23 points. Y-o-y, rates were 17% lower. Rates also dropped on the West Africa-to-East route, decreasing 14% m-o-m to WS37 points and falling 36% compared with August 2019.
Suezmax rates also declined in August, with average spot freight rates dropping 10% m-o-m on average in August. Rates were 24% lower y-o-y. On the West Africa-to-US Gulf Coast (USGC) route, Suezmax rates averaged WS41 points in August, down 5% from the month before. Y-o-y, rates were 27% higher than in August last year. The Northwest Europe (NWE)-to-USGC route fell by almost 15% m-o-m to average just under WS38 points, representing a 20% decline from the same month last year.
Aframax rates held relatively steady in August, edging down an additional 1% m-o-m, and were some 18% lower y-o-y. However, mostly minor losses were seen across the board, except on the Indonesia-to-East route, which experienced a gain of more than 7% m-o-m to average slightly above WS70 points, while still managing to be 20% lower y-o-y.
The Caribbean-to-US East Coast (USEC) route fell by more than 3% m-o-m to average WS69 points in August, but was some 8% lower y-o-y. The Mediterranean-to-NWE route edged up 4% m-o-m to average WS55 points, while the Cross-Med route was up 5% m-o-m at WS60 points. Y-o-y, rates were around 22% lower on both routes.
Clean tanker freight rates
Freight rates for clean spot tankers improved by 8% in August, while still remaining 19% lower than the same month last year. On the East of Suez route, clean tanker spot freight rates gained 16% m-o-m in August but were 28% lower compared to August 2019. The Middle East-to-East route increased more than 36% m-o-m to average WS84 points. The Singapore-to-East route edged up almost 3% to average WS92 points. Y-o-y, rates on the route were 30% lower. West of Suez, clean tanker spot freight rates moved 3% higher m-o-m in August and were 13% lower compared to the same month last year. Rates on the Cross-Med and Med-to-NWE routes fell 1% each to average WS83 and WS93 points, respectively. Meanwhile, rates on the NWE-to-USEC route gained more than 10% to average WS98 points.
Nikos Roussanoglou, Hellenic Shipping News Worldwide