In October, tanker spot freight rates for dirty and clean vessels saw gains across
all classes trading on various routes. Although the size of the gains varied, VLCC
rates achieved the strongest growth among all reported routes. Both crude and
product spot freight rates registered gains in October on most reported routes
compared with the previous month, though remaining mostly below the levels of
the previous year. In the dirty segment, VLCC, Suezmax and Aframax spot freight
rates increased by 52%, 6%, and 1%, respectively, over the previous month.
These improvements were mostly driven by higher vessel demand and seasonal
Clean tanker freight rates were mixed in October, with those for West of Suez
increasing by 8%, while East of Suez rates remained weak, down from one month
ago by 4%. Winter requirements supported freight rates in western destinations.
In October, OPEC spot fixtures increased by 15.2% from the previous month to
average 11.22 mb/d, according to preliminary data. The increase came on the back of
higher spot fixtures on both the Middle East-to-East and Middle East-to-West routes,
rising by 0.19 mb/d and 0.03 mb/d, respectively, in October to average 5.3 mb/d and
2.53 mb/d. In addition, fixtures outside the Middle East were up by 1.27 mb/d in
October, averaging 3.4 mb/d.
Sailings and arrivals
OPEC sailings increased by 0.12 mb/d, or 0.5%, in October to stand at 23.75 mb/d.
Middle East sailings increased, rising by 0.02 mb/d over the previous month to average
17.12 mb/d. Crude oil arrivals increased in October at North American and west Asian
ports, up by 1.6% and 6.2% respectively, over the previous month, while arrivals in
European and Far eastern ports showed a drop of 0.6% and 3.1%, respectively, from
the previous month.
Spot freight rates
VLCC freight rates showed remarkable gains in October across all reported routes
following months of gradual decline. Rates surged on all major trading routes from a
month before, though remaining below those of the previous year. October tonnage
availability tightened and market activities experienced their usual seasonal uptick.
Active markets in West Africa initially drove freight rate gains up as high tonnage
demand affected vessel availability in different regions. Freight rates did correct
downwards towards the end of the month simultaneously with tonnage build, mainly in
the Middle East, while a decline in West Africa took place to a lesser degree. VLCC
Middle East-to-East spot freight rates showed the strongest gain, up by 71% in October
to stand at WS60 points, followed by freight rates registered for tankers trading on the
Middle East-to-West route, which increased by WS12 points to average WS36 points in
October. VLCC spot freight rates on the West Africa-to-East route also rose by 48% to
average WS67 points. October gains were only seen on a monthly basis, as rates were
were down compared with the same period a year earlier.
Suezmax spot freight rates continued strengthening, showing further gains from one
month earlier, despite a downward correction in rates, mainly in West Africa, at the
beginning of the month as replacement requirements were totally covered. The
Suezmax market experienced occasional softer sentiment when activities waned.
Average Suezmax freight rates remained healthy, supported by higher rates registered
for tankers trading on the Northwest Europe-to-US route, which gained 13% to stand at
WS67 points. Similarly, an increase of 13% was seen over rates for the same month in
2015. Meanwhile, Suezmax spot freight rates for tankers operating on the West Africato-US
route remained flat from a month before to stand at WS67 points, below those of
the same month a year before by 14%.
Spot freight rates in the Aframax market varied on different routes. Average Aframax
spot freight rates rose slightly in October, increasing by only WS1 point from a month
earlier. This minor increase came as a result of mixed movement seen on different
trading routes. Aframax spot freight rates were high at the beginning of the month due
to active loading in the Baltics before rates came under pressure due to increased
number of ballasters and strong competition between ship owners, as loading
requirements in the market were limited. Spot freight rates dropped in the
Mediterranean – even when activity levels increased, rates did not follow suit –
declining despite delays at the Black Sea and Trieste ports. Spot freight rates on the
Mediterranean-to-Mediterranean and Mediterranean-to-Northwest Europe routes
dropped by 19% and 9%, respectively, from the previous month to stand at WS71 and
WS68 points. The Aframax market was also affected by reduced delays at the Turkish
Straits, which were kept at a minimum. On the other hand, a positive trend impacted
freight rates on the Indonesia-to-East route, edging up on average by 29% from a
month before to stand at WS82 points. Transatlantic fixtures also turned positive as the
market benefitted from anticipated weather delays ahead of an approaching hurricane
in combination with a tightening positions list. In the Caribbean, spot freight rates for
Aframax operating on the Caribbean-to-US route registered an increase of 6% in
October to stand at WS97 points.
Clean spot freight rates
Clean tanker spot freight rates gained 3% on average in October compared with the
previous month. The increase is attributed to a firmer West-of-Suez market. Mediumrange
tankers trading on the West of Suez route achieved higher freight rates along
several major routes, benefitting from demand ahead of the winter season. Clean spot
freight rates on the Northwest Europe-to-US East Coast (USEC) route increased by
WS2 points to stand at WS80 points. Similarly the Mediterranean-to-Mediterranean and
Mediterranean-to-Northwest Europe routes increased by 11% and 9%, respectively, in
October to stand at WS110 and WS117 points, respectively. In the East, spot freight
rates for tankers operating on the Middle East-to-East and Singapore-to-East routes
dropped by WS3 point and WS5 points, respectively, from the previous month. The
medium-range tanker market was uneventful, leading to an overall reduction in freight
rates in October, with individual rates slightly softening or remaining flat.