Tanker Market at Stalemate During February
The dirty tanker market remained at muted levels for much of February, although volatility accelerated at the end of the month as geopolitical developments intervened, OPEC said in its latest monthly report. Rates remained elevated into March, although coming down somewhat after the first few days. In monthly terms, average rates for February primarily reflect the amply supplied tanker market, rather than the jump seen toward the end of the month. VLCCs continued to be anchored at historically weak levels, as has been the case since mid-2020. Suezmax and Aframax rates performed better and were slightly higher than in the previous year, registering an improvement m-o-m. Clean rates were flat to the east but picked up in the Atlantic Basin, with rates in the Med picking up earlier in the month. The volatility that began at the end of February could potentially result in higher rates in March, with upward pressure concentrated in the Aframax and Suezmax classes, particularly on Med routes. The prospect of ongoing dislocations could result in longer voyages, thus supporting tanker market fundamentals. However, developments remain highly uncertain.
The latest estimates show global spot fixtures sharply lower in February, averaging of 10.2 mb/d. Fixtures fell 5.1 mb/d, or around 33% m-o-m, amid a seasonal decline and muted buying by China. Compared with the previous year, spot fixtures were down 5.8 mb/d, or 36%.
OPEC spot fixtures also declined m-o-m in February, averaging 6.4 mb/d, a drop of just under 4.0 mb/d or about 39%. Compared with the same month in 2021, they were about 3.6 mb/d, or 36%, lower. Middle East-to-East fixtures decreased 3.6 mb/d, or more than half, to average 3.3 mb/d. Compared with the same month last year, eastward flows were 2.1 mb/d, or about 40%, higher. Spot fixtures from the Middle East-to-West dropped 0.2 mb/d or 23% m-o-m in February, to average 0.8 mb/d. Y-o-y, rates were down 0.2 mb/d or 16%. Outside the Middle East, fixtures averaged 2.3 mb/d in February. This represents a 0.1 mb/d, or 5%, decline m-o-m and a drop of 1.3 mb/d or 37% y-o-y.
Sailings and arrivals
OPEC sailings rose by around 0.5 mb/d or 2% m-o-m in February to average 22.6 mb/d. OPEC sailings were 2.5 mb/d, or around 12%, higher compared with the same month of the previous year. Middle East sailings slipped 0.2 mb/d or just over 1% m-o-m in January to average 16.6 mb/d. Y-o-y, sailings from the region rose 1.7 mb/d, or around 11%, compared with February 2021. Crude arrivals were mixed in February, with West of Suez arrivals edging higher while those in the East declined. Arrivals in North America were marginally higher, averaging 9.0 mb/d, representing a m-o-m increase of less than 1%, while the y-o-y increase was 1 mb/d or 12%. Arrivals in Europe also edged up slightly to average just under 13 mb/d. This was 2 mb/d, or about 18%, higher than in the same month last year.
In contrast, arrivals in the Far East fell about 0.2 mb/d, or around 1%, m-o-m to average around 14.5 mb/d. Y-o-y, arrivals rose 2 mb/d, or about 16%, higher. In West Asia, arrivals fell m-o-m in February and were down by 0.4 mb/d, or close to 5%, to average 8.1 mb/d. This represented a y-o-y drop of 2.6 mb/d, or around 48%
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates remained sluggish in February, slipping 3% on average m-o-m, with rates across all reported routes moving lower compared to the previous month. On the Middle East-to-East route, rates dropped 3% m-o-m to average WS35 points. However, rates were 13% higher y-o-y. Rates on the Middle East-to-West route also declined, falling 6% m-o-m to average WS17 points. This represented a y-o-y decline of 19%. West Africa-to-East spot rates slipped 3% m-o-m to average WS36 in February. Compared with the same month last year, rates were 3% higher.
Suezmax rates picked up in February, erasing the previous month’s losses with a gain of 23% m-o-m. Y-o-y, rates were 25% higher. Rates on the West Africa-to-US Gulf Coast (USGC) route increased by 21% m-o-m in February to average WS64. Compared with the same month last year, rates were 28% higher. Spot freight rates on the USGC-to-Europe route rose 25% over the previous month to average WS64 points. Y-o-y, rates were 21% higher.
With the exception of the intra-Asian route, Aframax rates registered a good performance in February. On average, spot Aframax rates were 20% higher m-o-m. Compared with the same month last year, rates were 25% higher. Rates on the Indonesia-to-East route slipped 3% in February compared to the same month last year, averaging WS92. However, m-o-m, rates on the route rose 44%. Spot rates on the Caribbean-to-US East Coast (USEC) route rebounded from the previous month’s losses, increasing 40% m-o-m to average WS136. Y-o-y, rates were 39% higher.
Med routes showed gains in February, increasing by around 23% m-o-m on the Cross-Med route to average WS116. Y-o-y, rates were 18% higher. On the Mediterranean-to-NWE route, rates rose 17% m-o-m to average WS97. Compared with the same month of the previous year, rates were 1% higher
Clean tanker freight rates
Average clean spot freight rates moved higher in February, increasing 14% on average m-o-m and by 20% compared with the levels seen in the same month last year. Gains were due to improved rates West of Suez, particularly in the Mediterranean, as East of Suez rates edged lower. West of Suez rates rose 21% m-o-m while East of Suez rates slipped 1%.
In the West of Suez market, rates on the Northwest Europe (NWE)-to-USEC route rose 14% m-o-m to average WS153 points. They were 16% lower y-o-y. Rates in the Cross-Med and Med-to-NWE saw gains of around 24% to average WS209 and WS218 points, respectively. Compared with the same month last year, rates were about 27% higher on both routes. In contrast, the Middle East-to-East route slipped 2% m-o-m averaged WS98 in February. Y-o-y, rates increased 21%. Freight rates on the Singapore-to-East route also slipped m-o-m averaging WS128, down 1% from January 2021 but 6% higher than the same month last year.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide