Tanker Market: Seasonal Dip Experienced in December

The tanker market has witnessed a seasonal dip during the month of December, OPEC said in its latest monthly report. Dirty spot freight rates experienced a seasonal dip in December despite increased uncertainties along key routes that added upward pressure to rates. For 2023, spot freight rates declined from the elevated levels seen in 2022. Very large crude carriers (VLCCs) rates were less directly impacted by last year’s trade dislocations and thus experienced a less pronounced decline, falling 7% on the Middle East-to-East route in 2023. Suezmax averaged 17% lower on the US Gulf Coast (USGC)-to-Europe route. Aframax saw the largest decline, giving up about one-third of 2022’s gains. Rates on the Intra-Med route fell by about 32% in 2023 after more than doubling in 2022. Clean tanker spot freight rates experienced similar volatility, with rates on the Middle East-to-East route declining 30% in 2023, following an increase of 123% in 2022. Broadly speaking, increased tanker demand and longer distances travelled were insufficient to outweigh the market’s readjustment to last year’s trade dislocations, although lower fuel costs supported tanker earnings.

Spot fixtures

Global spot fixtures increased in December, gaining almost 2.0 mb/d, or about 1%, m-o-m, to average 14.2 mb/d. Compared with December 2022, global spot fixtures were up by 1.3 mb/d, or 10%. OPEC spot fixtures rose 0.2 mb/d, or about 2%, to average 9.7 mb/d in December. Compared with the same month in 2022, fixtures were about 0.6 mb/d, or 6%, higher. Middle East-to-East fixtures increased 0.4 mb/d, or almost 7%, to average close to 6 mb/d. Compared with the same month in 2022, fixtures on the Middle East-to-East route rose 0.6 mb/d, or about 11%. In contrast, spot fixtures on the Middle East-to-West route fell by 0.3 mb/d, or 27%, m-o-m, to average 0.8 mb/d. Fixtures were down 0.4 mb/d or about 31%, y-o-y. Fixtures on routes outside the Middle East rose by less than 0.1 mbd, or some 3%, m-o-m, to average 2.9 mb/d. Compared with the same month of 2022, fixtures gained 0.4 mb/d, or 15%.

Sailings and arrivals

OPEC sailings fell 1.2 mb/d, or 5%, m-o-m, to average 22.0 mb/d in December. Compared with the same month in 2022, OPEC sailings fell 1.7 mb/d, or 7%. Middle East sailings averaged 16.4 mb/d in December, representing a drop of 0.5 mb/d, or about 3%. Y-o-y, sailings from the region were 0.2 mb/d lower, or about 1%. Crude arrivals saw mixed movement in December. North American arrivals increased by 0.2 mb/d, or about 2%, to average 9.5 mb/d.

Compared to December 2022, North American arrivals were 0.5 mb/d, or 6%, higher. In contrast, arrivals in Europe declined by about 1.0 mb/d, or about 8%, to average 11.8 mb/d. Compared with the same month of 2022, arrivals to Europe fell by a similar 1.0 mb/d, or around 8%, in December. Far East arrivals rose 0.3 mb/d, or about 2%, m-o-m, to average 17.1 mb/d. Y-o-y, arrivals in the region were up 0.2 mb/d or close to 1%. Arrivals in West Asia, in contrast, edged marginally lower to average 8.2 mb/d. Y-o-y, arrivals in the region were 1.2 mb/d lower, or about 13%.

Dirty tanker freight rates

Very large crude carriers

Along with dirty spot freight rates, more generally, VLCC spot rates experienced declines across the board. VLCC spot freight rates fell 14%, m-o-m, ending the year with a seasonal decline. Compared with the same month of 2022, VLCC rates were 27% lower. On the Middle East-to-East route, rates declined 14%, m-o-m, to average WS59 points. This represents a y-o-y decline of 23%. Rates on the Middle East-to-West route fell 8%, m-o-m, to average WS37 points. Compared with the same month of 2022, rates on the route fell 36%. West Africa-to-East spot rates decreased 14%, m-o-m, to average WS59 points in December. Compared with the same month of 2022, rates were down 23%.

 

Suezmax

Suezmax spot freight rates gave up the gains of the previous two months, falling 17%, m-o-m, in December. They remained 39% lower than the elevated levels seen in the same month of 2022. On the West Africa-to-USGC route, spot freight rates declined 12%, m-o-m, in December to average WS95 points. Compared with the same month of 2022, spot rates were 41% lower. Rates on the USGC-to-Europe dropped by 20%, m-o-m, to average WS86 points. Compared with the same month of 2022, they were down 36%.

Aframax

Aframax spot freight rates plunged in the Atlantic Basin in December and edged lower East of Suez. On average, rates declined 25%, m-o-m. They were still 49% lower than in December 2022, when rates surged driven by geopolitical developments. Rates on the Indonesia-to-East route saw the smallest decline, falling 2%, m-o-m, to average WS160 points in December. Compared with the same month of 2022, rates were 48% lower. Spot rates on the Caribbean-to-US East Coast (USEC) route experienced a strong 42% decline, m-o-m, to average WS135 points in December. Compared with the same month of 2022, rates were down by almost 50%.

Cross-Med spot freight rates declined 24%, m-o-m, to average WS151 points. This represented a 52% decline, y-o-y. Meanwhile, rates on the Mediterranean-to-Northwest Europe (NWE) route lost 25%, m-o-m, to average WS143 points. Compared with the same month of 2022, rates were down by around 50%.

Clean tanker freight rates

Clean spot freight rates saw an improved performance in December compared to the previous month, with gains on both sides of the Suez. On average, clean spot freight rates East of Suez increased 16%, m-o-m, while rates in the West of Suez market edged up 2%. As a result, clean spot rates averaged 6% higher overall.

Rates on the Middle East-to-East route gained 12%, m-o-m, to average WS154 points. Compared with the same month of 2022, rates were 57% lower. Clean spot freight rates on the Singapore-to-East route rose 19%, m-o-m, to average WS182 points. This was 52% lower than in the same month of 2022. In contrast, spot freight rates on the NWE-to-USEC route showed the only loss on monitored routes, falling 3%, m-o-m, to average WS189 points.

The decline reflected ample product supplies in the USEC region. This represents a 47% decline compared with December 2022. Rates for the Cross-Med route rose 4%, m-o-m, to average WS263 points, and rates on the Med-to-NWE route showed a similar gain, up 4%, m-o-m, to average WS273 points. However, compared with the same month of 2022, rates were around 40% lower on both routes.
Nikos Roussanoglou, Hellenic Shipping News Worldwide