The tanker market faced downward pressure during the month of August. According to the latest monthly report from OPEC, “dirty tanker rates in August settled into the lower levels seen since the end of June and are likely to remain for the coming months amid ample tonnage and sluggish demand for tankers. Floating storage continued to unwind, removing a factor supporting rates in recent months. Clean tanker freight rates picked up from the poor performance seen in the previous month, but remained below levels seen in the same month last year due to continued sluggish demand for product trade flows.
Global spot fixtures remained muted m-o-m in August, declining 0.4 mb/d, or 3%, to average 13.4 mb/d. Spot fixtures were some 5.9 mb/d, or 30%, compared to the same month last year. This represents the change of fortunes in the tanker market relative the last year, as COVID-19 disruptions continue to weigh on demand amid high inventories in major demand centres.
OPEC spot fixtures averaged 9.68 mb/d in August, an increase of 0.7 mb/d, or 7%, from the previous month, as some spare capacity returned back to the market. Y-o-y, OPEC spot fixtures averaged 3.9 mb/d, representing a decline of 28%, reflecting production adjustments taken in response to the collapse in demand seen since April. After declining considerably over the previous months, fixtures from the Middle East-to-East rose 13%, or 0.7 mb/d, m-o-m in August to average 6.1 mb/d. Y-o-y, this represented decline of 2.0 mb/d, or 24%. Middle East-to-West fixtures experienced a similar trend, increasing 36% m-o-m in August. Fixtures on the route averaged 0.9 mb/d, down 0.4 mb/d compared to the same month last year. Outside of the Middle East, fixtures fell 10% m-o-m to average 2.7 mb/d. In annual terms, fixtures were down 1.6 mb/d, or 37%.
OPEC sailings picked up m-o-m following three months of steep declines, averaging 20.5 mb/d in August, compared to a high in April of 25.5 mb/d. M-o-m, OPEC sailings rose 0.7 mb/d, or 4%, but were down 4.2 mb/d compared to August 2019. Middle East sailings averaged 15.1 mb/d, representing an increase of 1.6 mb/d, or around 12% m-o-m, but a decline of 2.9 mb/d, or 16% y-o-y.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates continued to edge lower in August, slipping 15% m-o-m on average, as sluggish exports lengthened tonnage lists. Rates on the Middle East-to-East route led m-o-m losses in August, down 18% m-o-m to average WS33 points, and declined 43% compared to the same month last year. The Middle East-to-West route fell by around 10% to average just below WS23 points. Y-o-y, rates were 17% lower. Rates also dropped on the West Africa-to-East route, decreasing 14% m-o-m to WS37 points and falling 36% compared with August 2019.
Suezmax rates also declined in August, with average spot freight rates dropping 10% m-o-m on average in August. Rates were 24% lower y-o-y. On the West Africa-to-US Gulf Coast (USGC) route, Suezmax rates averaged WS41 points in August, down 5% from the month before. Y-o-y, rates were 27% higher than in August last year. The Northwest Europe (NWE)-to-USGC route fell by almost 15% m-o-m to average just under WS38 points, representing a 20% decline from the same month last year.
Aframax rates held relatively steady in August, edging down an additional 1% m-o-m, and were some 18% lower y-o-y. However, mostly minor losses were seen across the board, except on the Indonesia-to-East route, which experienced a gain of more than 7% m-o-m to average slightly above WS70 points, while still managing to be 20% lower y-o-y.
The Caribbean-to-US East Coast (USEC) route fell by more than 3% m-o-m to average WS69 points in August, but was some 8% lower y-o-y. The Mediterranean-to-NWE route edged up 4% m-o-m to average WS55 points, while the Cross-Med route was up 5% m-o-m at WS60 points. Y-o-y, rates were around 22% lower on both routes.
Clean tanker freight rates
Freight rates for clean spot tankers improved by 8% in August, while still remaining 19% lower than the same month last year. On the East of Suez route, clean tanker spot freight rates gained 16% m-o-m in August but were 28% lower compared to August 2019. The Middle East-to-East route increased more than 36% m-o-m to average WS84 points. The Singapore-to-East route edged up almost 3% to average WS92 points. Y-o-y, rates on the route were 30% lower. West of Suez, clean tanker spot freight rates moved 3% higher m-o-m in August and were 13% lower compared to the same month last year. Rates on the Cross-Med and Med-to-NWE routes fell 1% each to average WS83 and WS93 points, respectively. Meanwhile, rates on the NWE-to-USEC route gained more than 10% to average WS98 points.
Source: Hellenic Shipping