Tanker Market Subdued During July
Global spot fixtures declined m-o-m in July, falling by 1.7 mb/d, or around 11%, to average 13.8 mb/d. Declines came as Asian and European buying remained muted. Compared to the previous year, spot fixtures were slightly lower, falling by less than 1%. It should be noted that rates began the current low phase already in June 2020, coming down sharply from the exceptionally high levels seen earlier in 2Q21.
OPEC spot fixtures rose m-o-m in July, increasing by 0.5 mb/d, or almost 6%, to average just under 10 mb/d, amid a scheduled easing of production adjustments. Compared with the same month last year, OPEC spot fixtures were about 14% higher, rising by just under 1.0 mb/d. Fixtures from the Middle East-to-East averaged 5.9 mb/d in July, representing a gain of 0.5 mb/d, or 6% m-o-m, amid increased flows from the region to the Far East. Y-o-y, the route saw an increase of 0.7 mb/d, or over 14%. Middle East-to-West fixtures declined by almost 19%, or around 0.2 mb/d m-o-m, to average 870 tb/d, amid lower flows to Northwest Europe (NWE) and the Mediterranean. This was around 0.2 mb/d, or almost 32%, higher than in the same month last year. Outside the Middle East fixtures edged up 30 tb/d, or 1% m-o-m, to average 3.2 mb/d. Y-o-y, fixtures were around 6%, or around 0.2 mb/d higher.
Sailings and arrivals
OPEC sailings continued to rise m-o-m in July, gaining 0.7 mb/d, or over 3%, to average around 22.2 mb/d. Y-o-y, OPEC sailings were 2.1 mb/d, or 11%, higher than the very low levels seen in July 2020. Middle East sailings continued to show m-o-m gains in July, edging up by 0.3 mb/d, or close to 2%, to average 15.6 mb/d. Y-o-y, sailings from the region rose 1.8 mb/d, or 13%, compared with the same month last year. Crude arrivals in July were higher m-o-m on all routes with the exception of Europe. Arrivals in North America averaged 9.0 mb/d, representing a gain of 0.1 mb/d m-o-m, or around 2%, and a 1.2 mb/d, or over 15% increase y-o-y. Arrivals in the Far East averaged 15.0 mb/d in July, an increase of 1.6 mb/d, or 12% m-o-m, and a massive 5.8 mb/d, or over 63%, higher than the same month last year. In West Asia, arrivals more than recovered from the previous month’s losses, rising by 0.8 mb/d, or over 13%, to average 6.9 mb/d. Y-o-y, West Asia arrivals were 2.3 mb/d, or just over 50%, higher. European arrivals were relatively stable in July at 12.8 mb/d, marginally lower than in the previous month and a massive 3.9 mb/d, or 44%, higher than the same period last year.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates edged higher m-o-m in July, rising by 4%. However, VLCC rates declined 17% compared with the same month last year when rates were still coming down from very high levels. Rates on the Middle East-to-East route dropped by 3% m-o-m to average WS31 points as flows to Singapore declined. Y-o-y, rates were 21% lower. In contrast, rates on the Middle East-to-West route rose m-o-m by 5% in July to stand at WS22 points as gains in France and Italy offset declines in the Netherlands. However, y-o-y, rates were 12% lower. The West Africa-to-East route also increased by 3% m-o-m in July to average WS34 as insufficient import quotas constricted buying by Chinese independents. However, rates were 21% lower compared with July 2020.
Suezmax rates were down by 2% m-o-m in July amid lower demand for flows to the Far East as well as Europe. Rates were 7% lower compared to the same month last year. On the West Africa-to-USGC route, rates averaged WS46, a gain of 2% compared to the month before. Y-o-y, rates were 7% higher than in July 2020. Meanwhile, spot freight rates on the USGC-to-Europe route declined 5% m-o-m to average WS37 points. This was 20% lower compared with the same month last year.
Aframax rates fell further in July, dropping by 2% m-o-m as tonnage demand for the class in the Far East and Europe eroded. Minor declines were seen on all monitored routes. Y-o-y, rates were 28% higher. The Indonesia-to-East route saw a 1% decline m-o-m to average WS81, but was still 25% higher y-o-y. The Caribbean-to-USEC route fell 2% m-o-m to average WS79 in July, while rates were 11% higher y-o-y.
Med routes also fell m-o-m in July. The Cross-Med route averaged WS89 in July, representing a drop of 2% compared with the previous month. Y-o-y, however, rates were 41% higher. On the Mediterranean-to-NWE route, rates fell by 5% m-o-m in July to average WS79. Compared with the same month last year, rates on the route were 39% higher.
Nikos Roussanoglou, Hellenic Shipping News Worldwide