Tanker Market - December 14

Gains seen in October continued this month as both crude and product spot freight rates registered growth in November. Spot freight rates recovered across all tanker sectors, as the month exhibited positive monthly performance on all reported routes with no exception. Dirty tanker spot freight rates registered high gains, particularly for Suezmax and Aframax tankers, while VLCC gains occurred to a lesser degree and on a monthly comparison only, still generally reflecting the lower rates seen the year before. On average, VLCC spot freight rates increased by 18%, while spot freight rates for both Suezmax and Aframax were up by a notable 27% and 49%, respectively, compared with the previous month. Occasional tight availability, increased weather delays and seasonal activity drove dirty tanker freights up in November. Clean tanker spot freight rates gained 15% on average in November, compared with the previous month, supported mostly by a firming market in West of Suez.

Spot fixtures
In November, OPEC spot fixtures declined by 0.6% from the previous month to average 12.84 mb/d, according to preliminary data. Spot fixtures from the Middle Eastto- East were down by 12% from the previous month, while the Middle East-to-West route exhibited higher spot fixtures, up by 0.74 mb/d to average 2.39 mb/d. Supported by winter season demand, spot fixtures from outside the Middle East registered a smaller gain of 0.04 mb/d or 0.9% compared with a month earlier. On the whole, spot fixtures in all regions were higher than the same month a year before.

Sailings and arrivals
OPEC sailings dropped by 0.44 mb/d or 2% in November to stand at 23.72 mb/d. A similar drop was seen in Middle East sailings. In November, Middle East sailings were lower by 0.43 mb/d or 2.4% from the previous month to stand at 17.37 mb/d. Crude oil arrivals increased in November in Europe, the Far East and North America by 5%, 5% and 8.6%, respectively, compared with the previous month, while West Asia arrivals declined by 3.3%.

Spot freight rates
VLCC
In the dirty market, VLCC spot freight rates gained 18% on average in November in comparison with the previous month to stand at WS49 points, yet it was the only class remaining below the monthly rate of one year ago, reflecting a drop of 7% from November 2013. Tankers operating on the Middle East-to-East and Middle East-to- West routes increased by 20% and 25%, respectively, to average WS56 points and WS33 points, respectively, in November, while on average VLCC West Africa-to-East spot freight rates showed the least gain of 12% in November to stand at WS57 points. VLCC freight rates fluctuated, depending on tonnage demand. The requirement for vessels in the Middle East region eased in the second week of November, leading to owners accepting last done levels, thus holding back any freight rate gains as tonnage supply and demand were balanced.

The Atlantic market remained mostly firm during the month, as vessel availability continued to be limited. VLCCs were taken on a co-loading basis when Suezmax freight rates were firming, which led to higher freight rates registered in that region. VLCC freight rates increased towards the end of the month on the back of higher chartering activities registered in many regions.

Suezmax
Suezmax spot freight rates followed the same pattern as VLCC freight rates, however Suezmax monthly freight rate gains were higher and exhibited an increase on an annual basis as well, showing a worthy gain of 61% from the same period one year ago. The freight rate increase in November marks the highest among Suezmax freight rates since a hike at the beginning of the year. Suezmax spot freight rates for tankers operating on the West Africa-to-US route increased by 30% in November to stand at WS98 points, while rates on the Northwest Europe-to-US route gained 23% to stand at WS73 points. Support came mainly from a stronger Atlantic market. Meanwhile, the Black Sea market reflected strong activity and Middle East loadings also were at high levels, particularly to the West and India. Delays at the Turkish Straights were on the increase during the month, which also supported freight rates. West Africa loadings were active in November, despite losing some share to VLCCs.

Aframax
Aframax spot freight rates showed the strongest gains in the dirty market by closing up 49% on average in November compared with the previous month, to stand at WS148 points, the highest since January 2014. The increase seen in November reflects a jump of 85% from the same month one year ago. Spot freight rates for Aframax on the Mediterranean-to-Mediterranean and Mediterranean-to-Northwest Europe routes registered the highest gains of all reported routes.

Compared with one month ago, Mediterranean-to-Mediterranean Aframax spot freight rates increased by 81% in November to stand at WS168 points, while the Mediterranean-to-Northwest Europe route gained 88% to WS1160 points. Freight rates increased ahead of the approaching ice season, and gains were also driven by a bullish market in the Black Sea as demand for prompt tonnage increased. Stronger activities in the Mediterranean, weather delays in the Turkish Straits and several prompt replacements, in addition to delays in Trieste together supported freight rates in the region, which reflected a strong increase on both reported routes by 132% and 149% from the previous year.

The positive trend also impacted Aframax spot freight rates on the Caribbean-to-US route; they stayed mostly stable during the month – the result of a balanced market. However, sufficient tonnage requirements kept freight rates at levels lower than seen on other routes, averaging WS153 points, up by 19% from the previous month. The Indonesia-to-East route was up by close to 21% in November to average WS110.

Clean spot freight rates
Clean tanker spot freight rates went up 15% on average in November compared with the previous month. The increase in freight rates was registered in both directions of the Suez, though more so in the West of Suez market, which firmed by 21% from the previous month and 60% from the same month a year ago. The clean tonnage market firmed in the second half of the month on the back of tighter availability, as several prompt fixtures thinned the tonnage list, thus resulting in less available vessels for natural windows, while the number of ballasters to the region seemed less. Delays in the Turkish Straits further supported freight rates. As a result, clean spot freight rates on the Mediterranean-to-Mediterranean and Mediterranean-to- Northwest Europe routes increased by 22% and 20%, respectively, in November. East of Suez spot freight rates did encounter some gains, however to a lesser degree than what was seen in the West. Clean spot freight rates on the Middle East-to-East and Singapore-to-East routes increased by 2% and 4% from the previous month, to stand at WS126 and WS119 points, respectively.