Tanker Market - Aug 12

Source: OPEC_RP120809 8/10/2012, Location: Europe

In July, the tanker market followed the general trend that persisted strongly in the previous period. The quiet market, lower tonnage demand and the over-supply of ships together led to a decline in the tanker market situation in July and drove freight rates to low levels. Weak market sentiment affected all ship classes to varying degrees. The wide positions’ list kept the market in favour of charterers who were trying to obtain the lowest rates, while the increase in bunker prices caused owners’ earnings to bottom out. Global oil fixtures increased in July by 11.5% to stand at 20.73 mb/d. OPEC fixtures increased by 1.3% to average 11.79 mb/d. Preliminary data showed that OPEC sailings remained almost flat in July, to stand at 23.93 mb/d. In an annual comparison, OPEC sailings increased by 5%; however, Middle East sailings saw a minor decrease of 0.1%, to stand at 17.59 mb/d.

According to preliminary data, arrivals saw a mixed pattern in July. North America and West Asia arrivals saw gains of 5.4% and 2.5% respectively, while arrivals in Europe and the Far East decreased by 5% and 1.3% respectively. In comparison with the same period a year ago, the figures displayed the opposite tendency, as arrivals in North America and West Asia decreased by 4% and 9%, while arrivals in Europe and the Far East increased by 2.1% and 4.5% respectively. Generally, spot freight rates saw declines on all sectors and routes, with minor exceptions on some routes in the clean market. In the dirty tanker market, average spot freight rates for VLCCs dropped by 18%, while, for Suezmax and Aframax, they fell by 7.1% and 8.1% respectively. In the clean tanker market, West of Suez rates decreased by 9.9%, while East of Suez rates managed to close the month with a gain of 10.7% in July.

In July, the VLCC market continued declining, with the softening trend persisting for the whole month, as tonnage over-supply and weak demand continued to put pressure on the rates. VLCC spot freight rates declined on all reported routes in July. Middle Eastto- East and Middle East-to West rates experienced drops of 18.2% and 21.2% to average WS36 and WS26 points. In comparison with the same period a year ago, the average spot freight rate for said routes decreased by 27% and 33% respectively. Rates for West Africa-to-the-East dropped by 15.6% from June to stand at WS38 points, reflecting a decrease of 19% from the same month a year ago. Moreover, rates reached year-to-date low levels in July and the lump sum amount hit the lowest level this year.

Suezmax monthly average spot freight rates dropped by 7.1% to stand at WS59 points in July, while West Africa-to-US Gulf Coast rates decreased by 4.5% and the North- West Europe-to USEC-USGC route saw a larger drop of 9.8% to stand at WS55 points. Seemingly, Suezmax tankers were in competition with VLCC tankers, which were loading on a part-cargo basis.

Aframax average spot freight rates in July dropped 8.1%, with declining rates seen on all reported routes. The greatest drop was seen on the Caribbean-to-US East Coast route, falling by 13% in July to WS94 points. This fall came as a result of a quiet market, low activity and the available tonnage outnumbering the available cargoes. The same factors also influenced the Mediterranean; thus the Mediterranean-to-Mediterranean and Mediterranean-to-North-West Europe rates each saw a drop of 8.9% to stand at WS92 and WS93 points respectively. This decline came on the back of excess availability of prompt vessels in the area, despite some ships running late and a tight positions’ list at the beginning of the month. The Aframax market was also affected by the Norwegian oil-field strike, which resulted in some tanker fixtures being cancelled, leading to an increase in built-up tonnage and preventing a rise in rates. Another negative impact on the Aframax market in July was the pipeline maintenance at Primorsk, causing a loss of 10–12 cargoes, which otherwise could have been loaded. Towards the end of the month, the Aframax market picked up. However, this was not enough to offset the declines in the rates, as an excess supply of ships continued to drag them down.

The clean tanker market had mixed fortunes in July, while West of Suez average spot freight rates decreased by 9.9% to stand at WS126 points. East of Suez was the only route, in all classes, to see a gain — of 10.7%, to stand at WS125 points in July. Middle East-to-East rates gained 19%, in comparison with the previous month; this gain was mainly due to a relatively strong market in the Middle East. The West of Suez route showed a generally declining trend, as demand for tankers in the West was weak in July. Caribbean-to-US clean spot freight rates declined by 9.5% from a month earlier, to stand at WS134 points. As for the Mediterranean-to-Mediterranean and Mediterraneanto- North-West Europe routes, these saw drops of 6.4% and 5.3% to stand at WS132 and WS142 points respectively. The greatest drop was registered on the North-West Europe-to-USEC-USGC route, down 20.3% from the previous month. Overall, the clean tanker market was sluggish in July, since the current returns barely covered the owners’ operating costs.

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Related Categories: General  LNG Carriers  LNG Terminal  Natural Gas Storage  Oil and Gas Pipeline  Oil Storage  Railways  Tank Truck  Tankers 

Related Articles: General  LNG Carriers  LNG Terminal  Natural Gas Storage  Oil and Gas Pipeline  Oil Storage  Railways  Tank Truck  Tankers 

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