Ras Tanura Port Sees Decline in Tanker Congestion

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  • Ras Tanura Port Experiences 25% Decline in Tanker Congestion.
  • Port Days Metrics Surge by 177% Despite Decreasing Vessel Count.
  • Impact of Increased Port Days on Future Freight Market Dynamics.

This week, congestion levels are seen to have decreased by 25% compared to the previous week and month at Ras Tanura port for dirty tankers like VLCCs and Suezmax vessels. It is an indication of a traffic flow improvement. In contrast, port days metrics are recorded with a 25% rise in the weekly figure and even a higher 177% month-to-month increase, reports Break Wave Advisors.

Impact on Freight Market Dynamics

This can create bottlenecks leading to potential future congestion, especially if the trend persists. Such a buildup will reduce vessel availability and will therefore apply upward pressure on freight rates, especially if demand for Ras Tanura cargoes remains high. This dynamic is likely to influence freight market momentum in the coming weeks.

VLCC Freight Rate Trends on AG-China Route

Closing out the last week of October, the momentum on the VLCC freight rates for the AG-China route comes at 58 WS with a year-on-year growth of 9%. Setting aside positive momentum, future demand seems threatened by China’s outlook of low oil demand that will put pressure on further long-term freight rate gains.

IEA October Report and China’s Influence on Oil Demand

The IEA lowered its forecasts, cutting global oil demand growth to 862,000 bpd this year from 903,000 bpd. Weaker demand, mainly due to a slowdown in China, was brought about by slower economic recovery, industrial restrictions, and the pivot to renewable energy sources.

Aframax, Suezmax, and VLCC Freight Rates

Freight rates for various tankers are blended for different routes as follows:

  1. VLCC MEG-China Route: The rates closed at 58 WS, up by 9% compared to last year.
  2. Suezmax West Africa-Europe Route: The rates increased by 28% to 98 WS in the monthly period.
  3. Suezmax Baltic-Med Route: Rates increased by 32% in the year-on-year comparison to 113 WS.
  4. Aframax Mediterranean Route: Prices rose to around 170 WS, or 49% in the month, but leading indicators show a slowing in the momentum as October ebbs to a close.
  5. LR2 AG Route: Prices fell to around 105 WS, or 28% in the month and 39% y/y.

MR and Panamax Freight Rates

  1. Panamax Carib-USG Route: Prices held steady around 148 WS, or 26% lower on a y/y basis.
  2. MR1 Baltic-Continent Route: Remains at 150 WS, steady since early October, although still 17% off last month’s level.
  3. MR2 Continent-USAC Route: Rate fell to 95 WS, 37% below the same time last year.

Crude Tanker Supply Overview

Regional changes in crude tanker supply are reported, though this has tended to average less than the yearly average.

  1. VLCC Ras Tanura: Number of ships at 68, or 5 fewer than the annual average.
  2. Suezmax West Africa Ship count stands at 50, 9 short of the annual average.
  3. Aframax Mediterranean The current count of ships stands at 3 less than the annual average.
  4. Aframax Baltic Ship count stands at 25, but remains at 7 below the average.

Tonne-Day Growth Trends by Vessel Category

  1. VLCC Tonne-Days Growth has recently trended below March. There are now recent hints that it could recover going forward.
  2. Suezmax Tonne-Days Last week’s jump to 39 stabilized growth below the annual average.
  3. Aframax Tonne-Days: Recent momentum is subsiding, below the annual trend.
  4. Panamax Tonne-Days: This is still tracking lower and remains at the annual average.
  5. MR Tonne-Days: Both MR1 and MR2 are continuing drops, with first indications that MR2 might stabilise.

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Source:  Break Wave Advisors