Tanker Market Faces Summer Slump Amid Geopolitical And Seasonal Pressures

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The tanker market has shown varied performance across different vessel sizes and regions this week, reflecting the impact of seasonal fluctuations and geopolitical factors on shipping rates and activity levels, reports Fernleys.

VLCC (Very Large Crude Carriers)

The VLCC market remains uninspiring, with Middle East Gulf (MEG) to East Asia routes hitting new lows. A notable fixture involved a 15-year+ vessel to Thailand at WS 47, indicating that charterers are reluctant to consider anything above WS 50 even for modern vessels. The summer lull continues to suppress rates.

In the Atlantic, activity is subdued with fewer cargoes compared to June. The July cargo count stands at 72, down from 83 in June, contributing to a quieter market. With the US Independence Day holiday approaching, further activity in the US market is unlikely, resulting in a softer end to the week. Current rates for US Gulf (USG) to Ningbo and transatlantic routes are around USD 7.7 million and USD 3.3 million, respectively.

Suezmax

The Suezmax market in the Atlantic resembles a repetitive pattern, with TD 20 rates correcting down to around WS 100 after feeling overvalued at WS 112.5 last week. Rates are expected to hover in the low/mid WS 90s due to a slightly over-tonnaged list. A moderate bounce is anticipated based on emerging positive indicators in the US Gulf market.

In the East, a recent surge in off-market fixing has not been sufficient to prevent rate declines. The next MEG to East fixture is expected to trade at around WS 110, with a downward bias. The BOT to UK Continent (UKCM) route is projected to be in the mid-WS 50s via the Cape of Good Hope (COGH).

Aframax

The Aframax market experienced a slow start in the North Sea, with limited activity causing rates to fall by an additional 10 points. Tonnage availability remains healthy, contributing to the rate decline. In the US Gulf, markets took a hit but rebounded quickly. Independence Day celebrations are expected to limit activity this week, with a resurgence anticipated next week.

Overall, the market has been steady but slow-moving, with rates experiencing incremental changes in this stagnant environment. Increased activity could exert upward pressure on rates, especially as the tonnage list looks thinner at the front end and some vessels remain stuck in discharge ports.

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Source: Fernleys