The tanker market reached a higher ground during February. According to OPEC’s latest monthly report, “dirty freight rates improved in February, with m-o-m gains in VLCCs and Suezmaxes outpacing declines in Aframaxes. VLCCs picked up from a low base, as renewed demand for long-haul vessels strengthened rates. On the Middle East-to-East route, dirty spot freight rates rose 22% m-o-m. Gains in Suezmax spot freight rates earned back some of the previous month’s losses, with rates on the US Gulf Coast-to-Europe route up 18% from the previous month. By contrast, Aframax rates declined, although from high levels. Spot freight rates on the intra-Med route decreased by 18% m-o-m.
Overall, the tanker market remained firm in the first two months of 2023. This strength is expected to persist over the course of the year, supported by ongoing trade shifts which have increased demand for longerhaul voyages along with limited fleet growth. Clean rates edged up, as West of Suez rose 14% and East of Suez rates slipped 4%. Rates in the Atlantic basin claimed back some of the previous month’s losses.
The latest estimates show global spot fixtures recovered further in February averaging 13.9 mb/d. Fixtures increased by about 0.4 mb/d or around 3% m-o-m. Compared with the previous year, spot fixtures declined by 1.2 mb/d or around 8%.
OPEC spot fixtures increased in February to an average 9.8 mb/d. This represents a m-o-m gain of 0.8 mb/d, or 9%. In comparison with the same month in 2022, fixtures were 0.5 mb/d, or almost 5%, higher. Middle East-to-East fixtures rose by 1.2 mb/d, or about 25%, to average 6.2 mb/d. Compared with the same month of the previous year, eastward flows from the Middle East gained 0.9 mb/d, or over 16%. By contrast, spot fixtures from the Middle East-to-West declined in February, dropping 0.3 mb/d, or 24% m-o-m, to average around 1.0 mb/d. Y-o-y, rates also fell, down 0.1 mb/d, or almost 9%. Outside the Middle East, fixtures declined 3% m-o-m to average 2.6 mb/d. Compared to the same month last year, fixtures on the route fell about 0.3 mb/d or around 11%.
Sailings and arrivals
OPEC sailings edged higher in February, averaging 24.5 mb/d. This represents a m-o-m increase of about 0.3 mb/d or 1%. Y-o-y, OPEC sailings increased 0.6 mb/d or more than 3%. Middle East sailings averaged 17.6 mb/d in February, representing a gain of about 1.2 mb/d or over 7%. Y-o-y, sailings from the region fell 0.5 mb/d, or by about 3%. Crude arrivals recovered the previous month’s losses in the East of Suez, while West of Suez arrivals were flat to slightly higher. Arrivals in North America averaged 9.5 mb/d, broadly unchanged from the previous month and 0.8 mb/d, or 9%, higher y-o-y. Arrivals in Europe increased 0.2 mb/d, or less than 2% m-o-m, to average 12.4 mb/d. Compared to the same month last year, European arrivals declined 0.6 mb/d or about 4%.
Arrivals in the Far East rose 1.5 mb/d, or almost 10%, to average just under 17 mb/d. Y-o-y, Far East arrivals were 3.2 mb/d, or around 23%, higher. Arrivals in West Asia increased 0.9 mb/d, or over 10%, to average 9.5 mb/d. Y-o-y, arrivals in the region rose 1.1 mb/d, or about 13%.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates recovered some of the previous month’s losses, increasing by 17% on average m-o-m. Compared with the same month of the previous year, VLCC rates were up 86% on average. VLCC markets benefited from increased longer-haul demand.
On the Middle East-to-East route, rates increase 22% m-o-m to average WS60 points. This was 71% higher y-o-y. Rates on the Middle East-to-West route increased 8% m-o-m to average WS42 points. Y-o-y, rates on the route rose 147%.
West Africa-to-East spot rates rose 22% m-o-m to average WS62 points in February. Compared with the same month of the previous year, rates were 72% higher.
Suezmax rates saw experienced a slight recovery in February, gaining 5% m-o-m. Compared with the same month of the previous year, rates were 66%. Suezmax has benefited from ongoing trade flow adjustments. Gains were driven by spot freight rates on the USGC-to-Europe route, which rose 18% compared with the previous month to average WS100 points. Y-o-y, rates were 56% higher. By contrast, rates on the West Africa-to-US Gulf Coast (USGC) route declined by 4% to average WS112 points. Compared with the same month of the previous year, they were still 75% higher.
Aframax spot freight rates fell further in February, albeit from high levels. On average, spot Aframax rates declined 13% m-o-m. Compared with the same month of the previous year, rates were still up 64%. Aframax rates have remained strong, supported by trade flow adjustments. According to Vortexa data, around 66% of Russia’s maritime crude exports were shipped via Aframax last year. The Indonesia-to-East route continued to fall sharply, averaging WS187 in February. This represents a decline of 25% m-o-m, although y-o-y rates on the route were still 103% higher. By contrast, spot rates on the Caribbean-to-US East Coast (USEC) route showed some recovery from the sharp declines seen over the previous months. Rates rose 26% m-o-m to average WS191 points. Y-o-y, rates were 40% higher.
Cross-Med spot freight rates declined 18% m-o-m to average WS180 points. They remained 55% higher y-o-y. On the Mediterranean-to-Northwest Europe (NWE) route, rates dropped 23% m-o-m to average WS162 points. Compared with the same month of the previous year, they were around 67% higher.
Nikos Roussanoglou, Hellenic Shipping News Worldwide