Tankers: A Strong October | Hellenic Shipping News Worldwide
The tanker market showed signs of strength during the month of October, OPEC said in its latest monthly report. Dirty spot freight rates rose across the board due to a strong start to the month before weakening in the second half of October amid ample tonnage availability. An active US market and geopolitical uncertainties were key drivers supporting rates early in the month.
On the Middle East-to-East route, VLCC spot freight rates rose by 6%, m-o-m, in October, while rates on the West Africa-to-East route were up 5% over the same period. In the Suezmax market, rates on the US Gulf Coast-to-Europe route jumped 36%, m-o-m. A surge in Aframax rates encouraged charterers to switch to the large Suezmax vessels, although ample availability limited gains. Aframax rates on the Caribbean-to-US East Coast route surged 81%, m-o-m, rebounding from low levels in the previous month when weather impacts limited tanker demand. Support came from high demand early in the month for US crude flows via Aframax to Europe. Rates on the cross-Med route rose 41%, m-o-m. The clean market was mixed, varying by route, although, on average, rates fell both East and West of Suez. Soft demand for gasoline flows to the US limited activity in the clean spot freight market in the Atlantic Basin, which was offset by a better performance around the Mediterranean.
Spot fixtures
Global spot fixtures improved further in October, averaging 15.2 mb/d for the month, representing a gain of 1.2 mb/d, or about 9%, m-o-m. Compared with October 2023, global spot fixtures were 0.5 mb/d, or 3%, higher. All monitored routes experienced gains, except the Middle East-to-West route, which declined amid limited flows out to the Atlantic Basin. OPEC spot fixtures averaged 11.5 mb/d in October, representing an increase of 1.7 mb/d, or about 17%, m-o-m. Compared with the same month last year, fixtures rose 1.1 mb/d, or about 10%. Middle East-to-East fixtures increased 1.5 mb/d, or almost 25%, m-o-m, to average 7.6 mb/d. Y-o-y, fixtures on the Middle East-to-East route were 1.6 mb/d, or 27%, higher.
Spot fixtures on the Middle East-to-West route dropped by 0.3 mb/d, or 23%, m-o-m, to average 1.0 mb/d. The decline was due to a drop in volumes to Europe and the US. Compared with the same month last year, fixtures were down 0.4 mb/d, or over 27%, y-o-y. Spot fixtures on ‘Outside Middle East’ routes rose 0.5 mb/d, or almost 20%, m-o-m, to average 2.9 mb/d. Gains were driven by higher flows to the US. However, compared with the same month in 2023, fixtures were still down by 0.2 mb/d, or about 6%.
Sailings and arrivals
OPEC sailings increased in October, averaging 22.1 mb/d. This represented a gain of 1.3 mb/d or over 6%. Compared with the same month in 2023, OPEC sailings were up 1.5 mb/d, or about 7%. Middle East sailings fell, m-o-m, averaging 16.4 mb/d in October, registering a decline of 0.3 mb/d or 2%. Y-o-y, sailings from the region were down by 0.2 mb/d, or over 1%. Crude arrivals showed gains across the board.
North American arrivals increased by about 0.4 mb/d, or about 4%, to average 9.8 mb/d. Compared with October 2023, they were 0.9 mb/d, or almost 10%, higher. Europe increased by about 0.6 mb/d, or almost 5%, m-o-m, to average 12.4 mb/d. Compared with the same month in 2023, they were 0.8 mb/d, or about 7%, higher.
Far East arrivals averaged 14.5 mb/d in October, representing a gain of 0.9 mb/d, or almost 7%. Y-o-y, arrivals in the region were broadly unchanged. Arrivals in West Asia rose 0.5 mb/d, or about 6%, m-o-m, in October, averaging 9.6 mb/d. Compared with the same month last year, arrivals in the region were 2.2 mb/d, or about 30%, higher.
Dirty tanker freight rates
Very large crude carriers (VLCC)
Spot freight rates for VLCCs continued to show gains on all monitored routes in October, building on the previous month’s momentum. On average, VLCC spot freight rates rose by a further 4%, m-o-m, and they were up 6% compared with the same month in 2023.
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On the Middle East-to-East route, rates averaged WS56 in October, up 6% compared to the previous month. Y-o-y rates were 6% higher. Rates firmed on geopolitical concerns at the start of the month, and they softened as worries eased. The Middle East-to-West route also showed gains in October, rising 3%, m-o-m, to average WS35. Compared with the same month in 2023, rates on the route increased by 9%.
Higher rates out of the Middle East boosted spot freight rates on the West Africa-to-East route. These rose 5%, m-o-m, to average WS60 in October. Compared with the same month in 2023, rates were up 7%.
Suezmax
Suezmax spot rates jumped by 29%, m-o-m, in October but remained at 13%, on average, compared to the same month last year. Rates were supported by an active market in the US Gulf, with strength in the Aframax segment spilling over into the Suezmax class. On the West Africa-to-USGC route, spot freight rates in October averaged WS91, representing an increase of 23%, m-o-m. Market sentiment was strong coming into the month, although this dissipated by month end, amid increased availability. Spot rates were still 14% lower than the same month in 2023. Rates on the USGC-toEurope route showed a larger gain, boosted by increased activities in the USGC. Spot freight rates rose 36%, m-o-m, to average WS87. Compared with the same month in 2023, rates were down 12%.
Aframax
Aframax spot freight rates surged in October, with m-o-m gains on all monitored routes. West of Suez rates showed the greatest strength, driven by increased activity in the US Gulf Coast. On average, Aframax rates increased 41%, m-o-m, although spot rates were 8% below the levels seen in October 2023. Rates on the Indonesia-to-East route rose 12%, m-o-m, to average WS152 in October. Y-o-y, spot rates on the route were down 3% compared to the same month last year.
Spot rates on the Caribbean-to-US USEC route turned in a stellar performance, surging 81%, m-o-m, to average WS168 in October. Rates rebounded from a very weak performance in the previous month. Nonetheless, rates remained 13% below the same month last year. Cross-Med spot freight rates rose 41%, m-o-m, to average WS157, amid a return of flows from Libya. Compared with the same month last year, spot rates on the route were down 8%. Similarly, rates on the Medto-Northwest Europe (NWE) route averaged WS154, representing a gain of 45%, m-o-m. Compared with the same month in 2023, rates were down 5%.
Clean tanker freight rates
Clean spot freight rates saw mixed movements in October. Rates around the Mediterranean outperformed the previous month, while a lack of demand for gasoline flows from Europe into the US weighed on rates around the Atlantic Basin. On balance, West of Suez spot rates edged down 1%. Meanwhile, East of Suez rates fell 5%, m-o-m, amid lower flows to Asia, particularly China and South Korea.
Rates on the Middle East-to-East route fell 11%, m-o-m, to average WS134 in October. Compared with the same month in 2023, rates were 19% lower. In contrast, clean spot freight rates on the Singapore-to-East route rose 2%, m-o-m, amid stronger flows to Vietnam and Malaysia. Rates on the route averaged WS150, representing a 31% decline compared with the same month in 2023. Spot freight rates on the NWE-to-USEC route fell 26%, m-o-m, on a lack of traditional gasoline flows from Europe to the US.
Rates averaged WS89, which represents a 45% drop compared with October 2023. Rates around the Mediterranean showed healthy gains, m-o-m, but declined compared to the same month last year. Rates on the Cross-Med route were up 12%, m-o-m, to average WS132 but were 31% lower, y-o-y. Rates on the Med-to-NWE route increased 11%, m-o-m, and fell 29%, y-o-y, to average WS142.
Nikos Roussanoglou, Hellenic Shipping News Worldwide