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Tankers: A significant downward revision compared to the monthly volumes from the previous year

The conclusion of January presents an intriguing perspective on freight rates for LR2 clean product tankers, with recent rate spikes expected to persist into February due to heightened concerns in the Red Sea, influencing cargo deviations. A thorough analysis of clean cargoes originating from loading zones such as the Arabian Gulf, Pakistan/Western Coast of India, Far East, and the Red Sea, destined for the Mediterranean-UK continent, reveals a noteworthy decline in shipment volumes via the Suez Canal in January 2024. The visual representation above vividly portrays the reduction in shipments across various vessel classes and loading areas, underlining a significant contrast to the corresponding period in the previous year.​​​​​​

SECTION 1/ FREIGHT

Market Rates (WS)

‘Dirty’ WS – Mixed​

VLCC – Suezmax – Aframax

In late January, the crude oil freight rates reflected a more subdued scenario on the Suezmax Wafr Cont and Suez Baltic Med routes. Notably, VLCC-MEG-China rates maintained stability above WS60, while Aframax Med crude oil rates exhibited an increase compared to the levels observed two weeks prior.

VLCC MEG-China freight rates stood around 60 WS, while recent levels seem to perform at similar levels of a month ago.

Suezmax freight rates for shipments from West Africa to continental Europe have recently dipped below WS110, while rates on the Suez-Baltic-Med route have plummeted to levels below 130 WS, marking an almost 25% annual decline.

Aframax Med freight rates stood around WS190 levels, 19% higher than a year ago, while it remains to be seen whether rates will continue to rise and exceed the WS200 mark, as back in mid-November of the last year.

‘Product’ WS

LR2 Firmer

LR2 AG freight rates surged to levels surpassing 300 WS, marking an increase of nearly 50% compared to the previous month.

Panamax Firmer

Panamax Carib-to-USG rates rose to 328 WS, 30% higher than a month ago.

‘Clean’

MR Mixed

MR1 rates for the Baltic continent stood around 245 WS, a 60% decrease compared to a similar week a year ago.

MR2 rates for shipments from the continent to the US dropped to 167 WS, while rates on the MR2 USG-Cont route remained consistent but showed a 12% monthly increase. It’s worth noting that the current levels on the USG-Cont route are significantly higher, marking a 135% surge compared to the levels observed a year ago.

SECTION 2/ SUPPLY

‘Dirty’ (#vessels) – Decreasing

In the end week of January, a clear downward trend can be seen in the number of vessels for the main crude tanker vessel size categories.

VLCC Ras Tanura: The number of ships began to drop below 70, although there were signs of a peak of around 80.

Suezmax Wafr: The number of ships is now at 70, which is almost 20 ships less than a week ago.

Aframax Primorsk: The number of vessels is currently at 30, with signs of a decline below the annual average.

Aframax Med Novo: The number of vessels has been below the annual average of 10 for two weeks in a row and it looks as if the downward trend will continue for a few more days.

‘Clean’

LR2 (#vessels) – Decreasing

MR1 (#vessels) – Mixed

Clean LR2 AG Jubail: There has been a clear downward trend since the peak at the beginning of the year and it looks as if the significant decline will continue as the Red Sea continues to challenge the freight market.

Clean MR: There seems to be a lot of volatility with the latest vessel activity at 24 for MR1 Algeria Skikda, while in MR2 Amsterdam the number seems to rise to 49 vessels, 8 more than three weeks ago.

SECTION 3/ DEMAND (Tonne Days)

​​‘Dirty’ Decreasing

Dirty tonne days: A clear downward trend in demand in the VLCC segment, with the most recent values recording the weakest growth rates of the past year.

‘Clean’ Mixed

Panamax tonne days: There has been a notable surge from the lows observed at the beginning of the year, and the recent growth rates appear to maintain the robust levels witnessed just two weeks ago.

Clean MR tonne days: The decline continues significantly for both MR1 and MR2 vessel sizes, with the growth rate for MR1 decreasing at a similar rate to MR2.
Source: By Maria Bertzeletou, Signal Group, https://go.signalocean.com/e/983831/Account-Login/2pt9rw/379904093/h/dfoEVGhYaMcwjZeHs7i_vjXxfJZl-DtO1xpA181kHts

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