Tanker Market on Mixed Fortunes During March
According to the latest monthly report from OPEC, in March, the tanker market showed mixed patterns with VLCCs seeing a decline in spot freight rates on its various trading routes, with spot freight rates remaining under pressure from the supply of high vessels in this sector, while all other classes showed improved sentiment from the previous month. Average freight rates in March increased for Suezmax and Aframax classes by 14% and 4% from February, respectively. The higher rates were supported by several factors, but most importantly transit delays in the Turkish Straits, discharge delays in the East, and the occasional tightening in tonnage supply in some areas. Similarly, the clean market showed higher monthly freight rates on most reported routes, reflecting higher rates from those registered a year ago on both eastern and western directions of Suez.
Spot fixtures
According to preliminary data, global spot fixtures increased by 5.7% in March compared to the previous month, to average 16.87 mb/d. Higher spot fixtures were registered from the Middle East-to-West destinations, which increased by 0.08 mb in March from February, to average 2.65 mb/d. Spot fixtures from outside the Middle East registered a gain of 0.32 mb/d, or 9% in March, compared with one month before.
Sailings and arrivals
OPEC sailings increased by 0.02 mb/d, or 0.1% in March, to stand at 23.97 mb/d. This came along with an increase in Middle East sailings. In March, Middle East sailings gained 0.09 mb/d, or 0.5% from the previous month, to stand at 17.33 mb/d.
March Crude oil arrivals increased in European and Far East ports compared to the previous month, expanding by 0.41 mb/d, or 3.4%, and 0.07 mb/d, or 0.8%, respectively, while arrivals to North America and West Asia declined by 1.4 % and 1.5%, respectively.
VLCC
The VLCC market saw steady activities at the beginning of March. However, this was not enough to support VLCC spot freight rates, which remained under pressure, mostly edging down, as the tonnage list kept growing. Spot freight rates for tankers operating on different routes showed a decline, with the exception of some replacement fixtures. Despite April’s requirements into the market, March rates remained on a declining trend as the ample tonnage supply subdued any chance for freight rates gains. Vessel earnings hit multi-month lows. In March, VLCC spot freight rates for tankers operating on the Middle East-to-West route showed the highest drop among all routes, down by 26% from the previous month to stand at WS28 points. Freight rates registered for tankers on Middle East-to-East routes declined by 26% m-o-m, while VLCC spot freight rates for tankers trading on West Africa-to-East routes fell 17% m-o-m to stand at WS59 points in March.
Suezmax
Suezmax closed the month exhibiting general freight rate improvements compared to one month before. Suezmax average freight rates went up by WS10 points, or 13%, to stand at WS79 points in March. The average gains in rates were registered despite limited activities at the beginning of the month. Chartering conditions improved when April loading requirements were seen in the market and combined with a flurry of inquiries, Suezmax rates strengthened with improved sentiment on various routes. In the Mediterranean, the Suezmax market was active, which supported rates in the Mediterranean and the Black Sea, the latter also witnessing a steady flow of cargoes. Delays in the Turkish Straits due to foggy weather also supported higher rates. In West Africa, a tightening supply of vessels supported freight rates.
On average, spot freight rates for tankers operating on the West Africa-to-US route increased by WS14 points in March to average WS88 points. On the NWE-to-US route, Suezmax spot freight rates increased by 7% from February, to average WS69 points. Suezmax freight rates were corrected down at the end of month, with rates adjusted when charterers slowed market activities in order to arrest the increase in freight rates.
Aframax
Aframax spot freight rates turned positive in March, showing gains from the previous month, albeit at lower levels than those registered by Suezmax. On average, Aframax freight rates increased by 6% to stand at WS113 points in March. Aframax freight rates in the North Sea and the Baltics showed improvement, supported by high levels of inquiries during the month and despite a surplus availability of ice class ships. Aframax spot freight rates in the Mediterranean were also supported by port delays and long transit times at the Turkish Straits.
Tankers operating on the Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes registered higher spot freight rates of 10% and 14% during March, to stand at WS113 points and WS107 points, respectively. Spot freight rates for tankers operating on the Indonesia-to-East route showed an increase of 16% from the previous month to average WS121 points. In the Caribbean, rates were affected by bad weather conditions that reduced lighterage activities, in combination with a generally slowing market and limited delays in the US Gulf Coast. Aframax spot freight rates in the region for tankers operating on the Caribbean-to-US East Coast went down by 16% in March to average WS110 points, lower by WS22 points from the previous month. This was the only trading route that saw an average drop in freight rates in March.
Clean tanker freight rates
Clean spot tanker freight rates shared the tanker market’s general upward momentum, with mostly higher March freight rates, apart from one route. Average clean tanker rates rose in March, to show an improvement not only on a monthly basis, but also on an annual basis. Average clean tanker freight rates went up by 20% from February and by 38% from the same month a year earlier. The clean tanker market has been fairly active in several areas, with improved sentiment mostly for LR1 and MR tankers.
In the East of Suez, clean tanker spot freight rates from the Middle East-to-East route experienced an increase of 9% compared with the previous month. Clean spot freight rates for tankers trading on the Middle East-to-East route averaged WS126 points in March, while average gains were offset by lower spot freight rates registered for tankers operating on the Singapore-to-East route. These fell by 4% from the previous month. In the West of Suez, clean tanker spot freight rates increased as rates edged up for tankers of different sizes.
Spot freight rates for tankers operating on the NWE-to-US East Coast increased by 23%, to average WS166 points in March. In the Mediterranean, March clean spot freight rates increased compared with the previous month, partially on the back of operational delays.
Clean spot freight rates for tankers trading in the Mediterranean-toMediterranean route rose by 38% in March compared with the previous month, to average WS203 points. Clean spot freight rates for tankers operating on the Mediterranean-to-NWE route gained 36%, to stand at WS213 points. On average, spot freight rates registered in both East and West of Suez showed an annual increase of 8% and 59%, respectively.
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Source: Opec
