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Tanker Market Remained Depressed During June

The tanker market failed to recover during the month of June, according to the latest monthly report from OPEC. Dirty tanker rates remained at depressed levels in June as ample tonnage availability and constrained demand continued to weigh on the market. The search for better rates has even encouraged the use of newly built very large crude carriers (VLCCs) to carry clean products, eroding clean tanker rates. New deliveries, minimal scrapping and weak tanker demand point to a continued sluggish tanker market, possibly into next year.

Spot fixtures
Global spot fixtures declined m-o-m in June, falling by 1.6 mb/d, or around 10%, to average around 14 mb/d. Declines in flows to East Asia and India were partly offset by a pickup in flows to Europe. Compared to the previous year, spot fixtures were around 1.0 mb/d, or almost 7%, lower than the same month last year.

OPEC spot fixtures fell m-o-m in June, down by 1.5 mb/d, or a little over 14%, to average 8.9 mb/d, amid lower flows to China and India. Compared with the same month last year, OPEC spot fixtures were almost 10% lower, down by just under 1.0 mb/d. Fixtures from the Middle East-to-West provided a minor bright spot for the month, averaging 1.0 mb/d in June, representing a marginal increase of 3% m-o-m, amid increased flows to Europe. Y-o-y, the route saw an increase of 0.3 mb/d, or almost 48%. Middle East-to-East fixtures declined by almost 17%, or around 1.0 mb/d m-o-m, to average close to 5.1 mb/d. The decrease came amid lower flows to China and India, which were offset by higher flows to Japan and South Korea. This was almost 1.1 mb/d, or 17%, lower than in the same month last year. Outside Middle East fixtures fell by 0.5 mb/d, or close to 15% m-o-m, to average 2.8 mb/d. Y-o-y, fixtures were down by just over 7%, or around 0.2 mb/d.

Sailings and arrivals
OPEC sailings rose m-o-m in June, gaining 0.6 mb/d or almost 3% to average 21.5 mb/d. Y-o-y, OPEC sailings were 1.6 mb/d or 8% higher than the very low levels seen last year. Middle East sailings edged up m-o-m in June to average 15.4 mb/d. This represents a slight gain of less than 1%. Y-o-y, sailings from the region increased 1.2 mb/d, or 9%, compared with the same month last year. With the exception of West Asia, crude arrivals were higher m-o-m on all routes in June. Arrivals in North America averaged 8.9 mb/d, representing a gain of 0.4 mb/d m-o-m, or around 5%, and a 1.2 mb/d, or over 16% increase y-o-y. Arrivals in the Far East averaged 13.4 mb/d, an increase of 0.9 mb/d, or close to 7% m-o-m, and a massive 5.0 mb/d, or almost 60%, higher than the same month last year. European arrivals rose 0.8 mb/d or 7% m-o-m in June to average 12.8 mb/d, representing a y-o-y jump of 2.9 mb/d or 29%. Arrivals in West Asia saw the sole m-o-m decline, falling 0.2 mb/d, or close to 3%, to average 6.1 mb/d. Y-o-y, West Asia arrivals were 1.3 mb/d, or 28%, higher.

Dirty tanker freight rates

Very large crude carriers (VLCCs)
VLCC spot rates edged lower m-o-m in June, down 7%, and were some 36% lower compared with the same month last year. Rates on the Middle East-to-East declined 6% m-o-m to average WS32 points, as flows to China remained muted. Y-o-y, rates were 37% below the same month last year. Rates on the Middle East-to-West route also declined m-o-m, dropping 5% in June to stand at WS21 points, as ample availability outweighed a slight increase in fixtures. Y-o-y, rates were 30% lower. The West Africa-to-East route showed a loss of 8% m-o-m in June, averaging WS33, as uncertainties regarding crude import quotas constricted buying by Chinese independents. Rates were 38% lower compared with June 2020.

Suezmax rates were broadly flat m-o-m in June and were 7% lower compared to the same month last year. On the West Africa-to-USGC route, rates averaged WS45, a decline of 2% compared to the month before. Y-o-y, rates were 2% higher than in June 2020. Meanwhile, spot freight rates on the USGC-to-Europe route were unchanged at WS39 points. This was 15% lower compared with the same month last year.

Aframax rates erased the previous month’s gain in June, dropping 5% m-o-m, although some 31% higher than the same month last year.

Movements were mixed m-o-m, with the Indonesia-to-East route seeing a 2% decline m-o-m to average WS82. The Caribbean-to-USEC route erased the gains seen in the previous month, declining 21% m-o-m to average WS81 in June. However, y-o-y, rates on the route were 19% higher. Med routes enjoyed m-o-m gains in June. The Cross-Med route averaged WS91 in June, representing an increase of 5% over the previous month. Compared to the same month last year, rates were 47% lower. On the Mediterranean-to-Northwest Europe (NWE) route, rates rose 6% m-o-m in June to average WS83. Compared with the same month last year, rates on the route were 48% higher.

Clean tanker freight rates
Clean spot freight rates declined for the second month in a row in June, down 10% m-o-m, with losses across the board. East of Suez rates declined 7% m-o-m and rates to the west fell 12% m-o-m, respectively. Compared to the same month last year, East of Suez rates were 10% higher, while West of Suez rates rose 15%.

In the West of Suez market, rates on the Cross-Med and Med-to-NWE routes declined by around 13% each, to average WS130 and WS140 points, respectively. Y-o-y, rates were around 15% higher on both routes. Rates on the NWE-to-USEC route experienced a similar decline of around 12% m-o-m, to average WS116 points. Rates were 20% higher compared with the same month last year. In the East of Suez, the Middle East-to-East route saw a lesser decline m-o-m in June, falling 4% to average WS89. This represented a 9% increase compared with the same month last year. Meanwhile, freight rates on the Singapore-to-East route declined 9% in June compared with the previous month to average WS133. Rates were 11% higher compared with June 2020.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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