Home / Shipping News / Hellenic Shipping News / Tanker Spot Market Declined by 18% in February: Aframaxes Took the Biggest Hit

Tanker Spot Market Declined by 18% in February: Aframaxes Took the Biggest Hit

The Aframax tanker market seems to have taken the biggest hit during February, when it comes to average spot rates, as per the data from the latest monthly report from OPEC, issued this week. According to the report, following the same trend seen in the tanker market in the previous month, average dirty tanker spot freight rates continued to decline in February, dropping by 18%. Lower rates were seen in all reported dirty classes during the month for most of the reported routes. The drop in rates came on the back of holidays in the East, reduced port and transit delays, thin market activity in general, as well as an increase in prompt vessel supply. Dirty tanker freight rates for VLCC, Suezmax and Aframax classes declined by an average of 5%, 20% and 22%, respectively. Clean tanker spot freight rates were equally affected by the weakening trend as they were impacted by general bearish sentiment prevailing in the tanker market in February. A lack of activity was seen dominating different classes, with average clean tanker spot freight rates declining by 12% from the month before, affected mostly by low tonnage demand in the East.

Spot fixtures

According to preliminary data, global fixtures increased by 12.8% in February compared to the previous month. OPEC spot fixtures were up by 9%, or 1.24 mb/d, to average 14.98 mb/d. Fixtures on the Middle East-to-East route averaged 8.29 mb/d in February, up by 0.39 mb/d from a month ago, while those on the Middle East-to-West route averaged 1.81 mb/d. Outside of the Middle East, fixtures averaged 4.89 mb/d, rising by 0.43 mb/d m-o-m, and showing an increase of 19.3% compared with the same period a year earlier.

Sailings and arrivals

Preliminary data shows OPEC sailings were 0.3% lower m-o-m in February to average 25.25 mb/d. This was 0.78 mb/d above the same month a year ago. Middle East sailings increased by 0.1% from the previous month and by 4% compared with the same period a year earlier. February crude arrivals saw a mixed performance, with an increase of 6.9% in Europe m-o-m, while arrivals in other regions showed declines. North American, Far Eastern and West Asian ports decreased from the previous month by 3.5%, 0.5% and 1.5%, to average 9.87 mb/d, 9.15 mb/d and 4.38 mb/d, respectively.

Dirty tanker freight rates

Very large crude carriers (VLCCs)
Following the drop in January, VLCC freight rates saw a further softening in February as rates weakened on average by 5% m-o-m. The decline was mainly driven by a lack of cargo requirements, mainly in the East, while tonnage availability was extensive. Slow movement in the VLCC chartering market was seen across different routes.

Freight rates registered for tankers operating on the Middle East-to-East route declined by 7% from the previous month to stand at WS52 points. Similarly, West Africa-to-East routes dropped by 7% from a month ago to average WS52 points, impacted by the downward pressure in the region. On the other hand, Middle East-to-West routes rose by 6% m-o-m to stand at WS26 points, as the market in the West – mainly the US Gulf Coast (USGC) – was relatively balanced and rates started to pick up, mostly in the second half of the month. Overall, the VLCC freight rates were pressured by fewer cargo loading requirements and a sustained tonnage list. Nevertheless, VLCC average freight rates in February remained 29% above the levels seen in the same month a year before.

Suezmax
In line with the general downward trend, Suezmax average spot freight rates experienced an even larger drop than VLCCs in February. The Suezmax market was mostly quiet with few inquiries and limited tonnage demand. Chartering activities in several areas were bearish, with the Mediterranean and Black Sea mostly quiet, as inquiries were met with many offers. Similarly, the North and Baltic Sea regions showed an excess in vessel supply and prompt ship availability increasing in the area. Therefore, Suezmax rates dropped in February, despite owners’ repeated attempts to resist the drop in rates. However those attempts were not supported by market fundamentals and ample tonnage availability. Moreover, Suezmax rates were negatively affected by reduced delays at the Turkish Straits and a declining Aframax market. As a result, rates for tankers operating on the West Africa-to-USGC route decreased by 18% m-o-m to average WS63 points in February and rates on the Northwest Europe (NWE)-to-USGC route fell by 22% m-o-m to average WS50 points.

Aframax
Average Aframax spot freight rates saw the highest drop among tankers in the dirty tanker market, declining by 22% in February from the previous month, to average WS105 points.

Freight rates on all reported routes showed declines from the previous month, despite some scattered gains during the month. Like the larger ships, the Aframax class suffered from depressed tonnage demand, holidays in Asia and reduced transit delays, which supported spot tonnage availability. Nevertheless, Aframax benefited from some improvements in trading volumes in NWE and the North Sea, however these increases were short-lived and thus rates dropped on average.

Rates in the Mediterranean continued to decline dramatically as seen in the previous month. Spot freight rates for Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes declined by 27% m-o-m each to stand at WS95 points and WS91 points, respectively, in February. The Caribbean’s Aframax charter market dropped on average as tonnage demand remained depressed, hence Caribbean-to-US East Coast (USEC) average rates dropped by WS28 points from the previous month to stand at WS141 points. Aframax freight rates in the East dropped on the Indonesia-to-East route by 17% m-o-m to average WS93 points partially on the back of holidays in the East.

Clean tanker freight rates

Clean spot tanker freight rates also weakened in February and on almost all reported routes. The drop in rates was mainly driven by slow activity in the market, which could partially be attributed to the holidays in the East. On the other hand, reduced weather delays also led to the drop in rates, by supporting increasing prompt tonnage availability.

In the East of Suez, average clean tanker freight rates in February dropped by 20% from the previous month, as holidays in the East created a general slowdown in tanker movement in different classes. Rates for tankers trading on the Singapore-to-East route dropped by 17% m-o-m, and rates for the Middle Eastto-East route showed a decline of 23% m-o-m to stand at WS154 points and WS113 points, respectively. In the West of Suez, average spot freight rates experienced a drop of 7% m-o-m to average WS154 points in February. In the Mediterranean, lower tonnage demand, mainly for medium-range tankers in the Black Sea, drove the drop in rates, as average freight rates for clean tankers trading on both the Mediterraneanto-Mediterranean and Mediterranean-to-NWE declined by 10% and 9% m-o-m, to stand at WS160 and WS170 points, respectively. The drop in the West of Suez rates was stabilized by a steady market in NWE, where freight rates on the NWE-to-USEC route remained broadly flat compared to the previous month and stood at WS133 points in February.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Leave a Reply

Your email address will not be published. Required fields are marked *

*

captcha

Please enter the CAPTCHA text

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping