For the most part, dirty tanker spot freight rates developed negatively in July or maintained previous low
levels. VLCC and Suezmax average spot freight rates remained almost flat compared with the previous
month, whereas Aframax rates dropped by 6%. The decline was due to low tonnage demand, limited
inquiries and port maintenance, which kept the tonnage list populated at all times, as even prompt
requirements were met easily. The dirty tanker market maintained its seasonal low tonnage demand,
thereby affecting freight rates negatively while tonnage availability kept growing with an increase in new
deliveries being reported. Clean tanker spot freight rates were mostly weak despite fixtures to eastern
destinations showing higher rates than the previous month.
Spot fixtures
Global fixtures dropped by 4.9% in July compared with the previous month. OPEC spot fixtures declined
by 0.89 mb/d, or 6.7%, averaging 12.27 mb/d, according to preliminary data. The drop in fixtures was mainly
registered on western routes. Fixtures on the Middle East-to-West bound destinations were lower by 42%, or
1.37 mb/d, while the Middle East-to-East fixtures and those outside of the Middle East increased by
0.27 mb/d and 0.22 mb/d, respectively. Compared with the same period one year earlier, all fixtures were
higher with one exception – Middle East-to-West fixtures – which dropped by 39% from the previous year.
Sailings and arrivals
Preliminary data showed that OPEC sailings declined by 0.28 mb/d in July, averaging 24.13 mb/d, however
they were 0.06 mb/d higher than the same month a year earlier. July arrivals in North American ports showed the only decline during the month as they dropped by 0.51 mb/d, while arrivals at Europe, the Far East and West Asia all increased by 0.04 mb/d, 0.09 mb/d and 0.19 mb/d, respectively, to average 12.04 mb/d, 8.83 mb/d and 4.68 mb/d.
VLCC
While the month started with slim activity in general for VLCCs as the chartering market lacked new
requirements, the tonnage list nevertheless remained long enough to easily meet even rapid requirements.
Earnings remained at very low levels despite some improvement in activity at the end of the first week of the
month; however, that rarely translated into any significant increase in freight rates. Rates were often kept
under pressure in several markets as the loading requirements remained limited, keeping rates under
pressure. VLCC spot freight rates for tankers operating on the Middle East-to-East route showed an increase
of only WS1 point from the previous month, to average WS52 points in July. VLCC spot freight rates for
tankers operating on the West Africa-to-East route dropped by only WS2 point from a month earlier to
average WS54 points. VLCC spot freight rates on the Middle East-to-West long-haul route showed no
changes from the previous month to average WS26 points. Generally spot freight rates exhibited typical
seasonal developments usually seen in the summer months. Annually, average spot freight rates for VLCCs
were higher by 13% than the same month a year before.
Suezmax
Suezmax spot freight rates turned flat in July in comparison to the previous month, standing at
WS58 points on average. Suezmax freight rates were often under pressure during the month. The Suezmax
market suffered from excess availability, which prevented freight rates from registering significant gains,
even during relatively higher tonnage demand days. The chartering market in West Africa experienced an
occasional tightening of vessel supply which seemed to support freight rates at that point however the
situation cleared rapidly bringing back freight rates to previous levels. As a result, spot freight rates
registered for tankers operating on the West Africa-to-US route were almost stable compared to those of the
previous month and averaged WS61 points, showing only a slight increase of WS1 point m-o-m. Spot rates
on Northwest Europe (NWE)-to-US routes decreased by 3% to average WS55 points.
Aframax
Aframax spot freight rates showed a decline across all reported routes in July from one month before.
On average, Aframax freight rates dropped by 6%. Lower freight rates were driven by several factors
including field and berth maintenance, limited chartering activities and, most importantly, a prolonged
tonnage list.
Rates could have deteriorated further but for enhanced activity combined with a lighter position list,
nevertheless, despite an occasional increase in activity, rates were mostly maintained at last done levels.
Rates in the Mediterranean continued to decline by similar levels as in the previous month. Spot freight rates
for Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes declined by 8% and 9% to stand at
WS84 points and WS77 points, respectively. The Caribbean’s Aframax charter market had an uneventful
month as rates often showed no changes, hence Caribbean-to-US average rates dropped by only WS1
points from the previous month to stand at WS92 points.
Aframax freight rates in the East dropped on the Indonesia to-the-East route by 7% to average WS 87 points.
Clean tanker freight rates
Clean tanker market sentiment was mixed in July, with clean spot freight rates showing differing patterns.
On average, clean spot freight rates increased by 6% in the East of Suez and dropped by 4% in the West.
East of Suez spot freight rates on reported Middle East-to-East and Singapore-to-East routes both rose by
6% and 7%, respectively, from the previous month. Rates averaged WS114 points and WS147 points,
respectively. This increase came on the back of higher activity in the Middle East which was seen for
different classes, initially for LR’s but followed by similar improvements for MR’s.
West of Suez spot freight rates reported losses on all routes as tonnage demand was weak in general and
rates for different classes often turned flat despite the occasional strengthening in West Africa and
Mediterranean. Rates for tankers operating on the NWE-to-US route dropped by 9% over the previous
month, to settle at WS126 points. Both Mediterranean-to-Mediterranean and Mediterranean-to-NWE rates
also declined by 4% each to average at WS133 and WS143 points, respectively.
