Tanker Market - Jul 13

Source: OPEC_RP130709 7/13/2013, Location: Europe

In June, estimated OPEC spot fixtures decreased by 8% compared with last month to average 13.0 mb/d. Global spot fixtures declined by 10% in June compared with the previous month to average 17.8 mb/d. This decline came as a result of a reported decrease in all chartering activities in June, with the greatest drop registered on tankers out of the Middle East, declining by 0.91 mb/d or 18% from the previous month.

OPEC sailings followed the same suit, declining by 0.16 mb/b in June, compared with last month, to stand at 23.74 mb/d. The OPEC sailing drop came mainly as Middle East sailing dropped by 0.14mb/d. Nevertheless, arrivals showed a mixed pattern in June as North American and Far Eastern arrivals increased by 0.48 mb/d and 0.46 mb/d, respectively, while European and West Asian arrivals exhibited a decline of 0.12 mb/d and 0.33 mb/d to stand at 9.03 mb/d and 0.46 mb/d, respectively.

The dirty tanker market showed mixed trends in June, with VLCC spot freight rates reporting a gain of 5% while both Suezmax and Aframax rates experienced losses of 6% and 2%, respectively, compared with last month. Clean spot freight rates were very weak in comparison to a month earlier with West of Suez rates declining by 12%, the highest among the all groups, and East of Suez rates ending the month 5% lower.

For VLCCs, the month started with demand seen lower as the June requirement was about to be covered, with charterers keeping their slow pace in covering their requirements to maintain the pressured freight rate levels as they did in the past couple of months The first week of June also witnessed an inactive market for West Africa loadings, however the situation improved at a later stage as there was steady demand on West Africa-to-East with prompt windows resulting in higher freight rates registered on that market. Therefore, West Africa-to-East edged up by 5% to stand at 40 WS points. Despite the charterer’s constant attempts to take advantage of the quiet market, it was not completely successful as the owners’ resistance helped in holding up the market and preventing freights from declining.

The third week of June saw a busy market for Middle East-to-West routes, gaining 4% to stand at 25 WS points. Similarly, Middle East-to-East spot freight rates increased by 5% from the previous month to stand at 42 WS points. At that point, and since VLCC rates were firming, charterers were considering the option of splitting their cargoes to benefit from lower Suezmax freight rates. However, by the end of the month, freight rates were seen weaker for Middle East loadings, while West African market activity thinned with fewer fixtures and freight rates were often reported at last done levels. On the other hand, compared with a year ago, all selected route spot freight rates exhibited declines. On average, VLCC spot freight rates decreased by 12% compared with a year ago.

Suezmax spot freight rates reported a negative performance in June as all reported routes saw lower freight rates from a month earlier. Suezmax freight rates in West Africa were under pressure despite the adequate amount of activity seen in that market at the beginning of the month but which lessened later on. While tonnage availability was increasing in the west, activity in Northwest Europe was slimming. The Suezmax activity in USGC was moderate, mainly involving lighterage operations. Middle East loadings, on the other hand, have shown stable activity to both eastern and western destinations, however freight rates kept flat. The end of the month, registered higher activity for Suezmax in the Mediterranean in addition to some delays at Trieste, however, freight rates did not benefit from these factors as vessel supply remains abundant. In general, Suezmax fixtures were done at lower levels, dictating a weak market as even prompt replacements were done at prevailing levels with no premiums. Therefore, freight rates for tankers operating from NW Europe to the US lost 14% in June, compared with the previous month to average 48 WS points, and rates from West Africa to the US decreased by 8%. On an annual basis, Suezmax spot freight rates declined 26% in June, compared with the same period a year ago.

In June, Aframax spot freight rates reported a mixed performance as rates from the Caribbean to the US declined while freight rates on all other reported routes gained as the market was balanced to a certain extent on the back of some delays and prompt replacements. Activity reported for the North Sea was stable, however freight rates strengthened slightly afterwards on the back of higher crude and fuel activity in the Baltics. Tankers engaged in longer voyages and thus caused a shorter positions’ list, particularly for a prompt loadings. Freight rates for tanker operations on the Mediterranean-to-Mediterranean, Mediterranean-to-NW Europe and Indonesia-to-East routes increased by 3%, 6% and 4%, respectively, from a month earlier. While on a contrary pattern, freight rates for Aframax trading on the Caribbean-to-US route declined by 15% to stand at WS 94 points. This decline came as a result of limited cargo requirements in the area. Freight rates kept falling despite delays seen in the USGC as ullage was insufficient. The expectation that the delays might encourage lighterage activity and give support to freight rates did not materialise.

Clean tanker market sentiment was bearish in June on all reported routes. On average, East of Suez declined by 5% while the decline was seen greater on West of Suez as it declined by 12%. Clean tanker freight rates were weak throughout the whole month. Despite relatively high activity seen on the continent at some point, activity levels were stable at best for both medium-range and long-range tankers, however tonnage availability for eastbound were less than those for the west, which confirmed more availability even for prompt dates. Therefore, Mediterranean-to-Mediterranean clean spot freight rates decreased by 9%, and Mediterranean-to-NW Europe dropped by 8% from a month earlier, standing at WS 128 points and WS 138 points, respectively. The huge tonnage buildup cast its shadows even on freight rates for vessels trading on Middle East-to-East and Middle East-to-West routes as both declined by 3% and 7%, respectively, from a month ago. MR’s trading on the NW Europe-to-US route experienced the greatest decline at 28 WS points or 19% from a month ago as a result mainly of lower activity and limited cargoes. The low freight levels seen on that route created a low interest from owners in moving their vessels to the west.


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


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