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Tanker Market Weak Throughout November

The tanker market stayed weak during the month of November, OPEC said in its latest monthly report. Dirty tanker rates remained weak in November, at the historically low levels so far in 2H20, amid ample tonnage lists. However, signs indicating that November could be the bottom of the market have provided some hope for ship owners as they look to 2021. Clean tanker rates picked up from multi-year lows, supported by improving West of Suez activities.

Spot fixtures
Global spot fixtures rose m-o-m in November, after dipping lower the month before, increasing 0.22 mb/d, or 1.5%, to average 15.09 mb/d. The increase came as Chinese refiners returned to the market after a pause due to the Golden Week holiday and as independent refiners received another round of import quotas. Spot fixtures were still 4.9 mb/d, or almost 25%, lower than the same month last year, reflecting the overall muted environment due to the COVID-19 pandemic.

OPEC spot fixtures averaged 10.19 mb/d in November, representing an increase of 3% m-o-m, or 0.3 mb/d. Compared to the same month last year, OPEC spot fixtures were 28% lower, or almost 4 mb/d, reflecting in part production adjustments by OPEC countries. Fixtures from the Middle East-to-East averaged 6.5 mb/d in November, representing a gain of 0.6 mb/d, or 10%, m-o-m. Y-o-y, this represents a decline of 1.6 mb/d or almost 20%. In contrast, Middle East-to-West fixtures were sharply lower in November, falling 46%, or 0.6 mb/d, to average 0.7 mb/d. This was still 0.9 mb/d, or 56%, lower compared with the same month last year. Outside of the Middle East, fixtures increased 10% m-o-m, or 0.3 mb/d, to average just under 3.0 mb/d. In annual terms, fixtures were down by almost 32% or 1.4 mb/d.

Sailings and arrivals
OPEC sailings increased 1.7% in November, or 0.35 mb/d, to average 21.07 mb/d, compared with a yearhigh of 25.5 mb/d recorded in April. The increase came as more Libyan barrels became available in the market. Y-o-y, OPEC sailings were 4.3 mb/d, or 17%, lower. Middle East sailings averaged 14.6 mb/d, representing an increase of 0.3 mb/d, or 2% m-o-m, but down almost 3.9 mb/d, or 21%, compared to the same month last year. Crude arrivals in November increased m-o-m in all regions except North America. Far East arrivals led gains, increasing 14% m-o-m, or 1.4 mb/d, to average 11.1 mb/d. Arrivals in Europe continued to move higher m-o-m , averaging 10.3 mb/d, representing a gain of 3%, or 0.3 mb/d, over the previous month, but were still 1.3 mb/d, or close to 12%, lower y-o-y. Arrivals in West Asia were higher by 2.5% m-o-m, or 0.1 mb/d, to average 5.38 mb/d.

Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates continued to edge lower in November, falling on average 5% m-o-m, as tonnage demand continued to be weak and the unwinding of floating storage increased availability. Rates on the Middle East-to-East route fell a further 5% m-o-m in November to average WS26 points. Y-o-y, rates were more than 70% lower compared with the same month last year. Rates on the Middle East-to-West route declined 7% m-o-m to average WS17 points. Y-o-y, rates have declined 70%. Rates also dropped on the West Africa-to-East route, decreasing 2% m-o-m to average WS30 points. Rates were 69% lower compared with November 2019.

Suezmax rates managed a positive performance in November, with average spot freight rates gaining 12% on average m-o-m, as the market picked up from a dip October. However, they were still 68% lower y-o-y. On the West Africa-to-US Gulf Coast (USGC) route, Suezmax rates averaged WS32 points in November, representing a 19% gain from the month before. Y-o-y, rates were 70% lower than in November last year. The Northwest Europe (NWE)-to-USGC route rose 6% m-o-m to average WS31 points, but this still represented a 66% decline from the same month last year.

Aframax rates also turned in a positive performance in November, increasing for the second-consecutive month. Compared to the previous month, rates were up 8% in November, but still 61% lower y-o-y. The Caribbean-to-US East Coast (USEC) route was the main contributor to the increase, enjoying a 49% improvement m-o-m in November to average WS69, yet 55% lower y-o-y.

Developments in the Mediterranean were mixed. The Cross-Med route continued to increase, gaining 3% m-o-m to average WS62. In contrast, the Mediterranean-to-NWE route declined 5% m-o-m to average WS53, which represented a 65% drop y-o-y. The Indonesia-to-East route also declined 5% m-o-m to average WS53, some 62% lower y-o-y.

Clean tanker freight rates
Clean spot freight rates continued to edge higher m-o-m in November, up 2% due to an ongoing improvement on West of Suez routes. Rates on westward routes were 5% higher on the month. The Mediterranean region experienced gains both Cross-Med and Med-to-NWE, increasing by 7% and 13%, to average WS77 and WS83 points, respectively. Rates on the NWE-to-USEC route declined by 3% m-o-m to average WS76 points.

East of Suez rates edged down 1% m-o-m in November and remained some 47% lower compared with November 2019. Gains on the Middle East-to-East route were not enough to offset losses on the Singaporeto-East route, which averaged WS73 and WS94, respectively.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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