Tanker Market Feel in December

Dirty freight rates in December fell from elevated levels as activities slowed ahead of seasonal holidays, with losses on almost all monitored routes, OPEC said in its latest weekly report. VLCCs showed the biggest decline on average, with spot freight rates on the Middle East-to-East route falling 31% m-o-m. In the Suezmax class, dirty spot freight rates declined 22% on the US Gulf Coast-to-Europe route. Aframax rates saw the smallest decline, slipping around 3% on the inter-Mediterranean route. The decline in dirty spot freight rates came as sanctions on Russian maritime crude flows took effect in December, implying that the tanker market has sufficiently adjusted so far to trade dislocations. Clean rates remained robust, up 50% on the Middle East-to-East route and around 25% higher in the Mediterranean. Continued tonnage demand amid impending sanctions on Russian refined product flows and lengthening voyages kept tanker availability tight.

Spot fixtures

The latest estimates show global spot fixtures declined from elevated levels in December to average 10.3 mb/d. Fixtures fell by 6.3 mb/d, or almost 38% m-o-m. Compared with the previous year, spot fixtures declined by 3.4 mb/d or around 25%.

OPEC spot fixtures declined in December to average 7.4 mb/d. This represents a m-o-m decline of 4.8 mb/d, or 39%. In comparison with the same month in 2021, fixtures decreased by 2.0 mb/d, or more than 21%. Middle East-to-East fixtures fell by 2.8 mb/d, or more than 38%, to average 4.5 mb/d. Compared with the same month the previous year, eastward flows from the Middle East declined 1.2 mb/d, or almost 21%, higher. Spot fixtures from the Middle East-to-West showed a decline in December, down by around 0.3 mb/d, or 26% m-o-m, to average around 0.9 mb/d. However, y-o-y, rates were 0.3 mb/d, or almost 58%, higher. Outside the Middle East, fixtures averaged just under 2.0 mb/d. This represents a decline of 1.6 mb/d, or 45% m-o-m, and a drop of 1.2 mb/d, or around 37%, y-o-y.

Sailings and arrivals

OPEC sailings fell 0.2 mb/d, or less than 1% m-o-m in December, to average 22.9 mb/d. This was close to 0.8 mb/d, or about 3%, lower compared with the same month a year ago. Middle East sailings edged down marginally to average 16.9 mb/d. Y-o-y, sailings from the region declined about 0.9 mb/d, or around 5%, compared with December 2021.

Crude arrivals saw a mixed performance in December. Arrivals in North America declined around 0.3 mb/d, or about 3% m-o-m, to average 9.0 mb/d. They were marginally higher y-o-y. Arrivals in Europe increased 1.2 mb/d, or more than 10%, to average 12.7 mb/d. European arrivals were broadly in line with the same month of the previous year. Arrivals in the Far East declined 0.3 mb/d, or about 2%, to average just under 17 mb/d. Y-o-y they were around 2.2 mb/d, or almost 15%, higher. West Asian arrivals saw the biggest m-o-m increase, gaining 2.1 mb/d, or 28%, to average 9.4 mb/d. Y-o-y, arrivals in the region rose 0.5 mb/d, or about 5%.

Dirty tanker freight rates Very large crude carriers (VLCCs)

VLCC spot rates in December gave back some of the gains achieved over the previous months, declining 28% on average m-o-m. However, compared to the same month in the previous year, VLCC rates were up 100% on average. On the Middle East-to-East route, rates fell 31% m-o-m to average WS77 points. This was still 93% higher y-o-y. Rates on the Middle East-to-West route lost 15% m-o-m to average WS58 points. Y-o-y, rates on the route were down by 142%. West Africa-to-East spot rates declined 31% m-o-m to average WS77 points in December. Compared with the same month of the previous year, rates were 88% higher.

Suezmax

Suezmax rates also gave up most of the previous month’s gains in December, falling 19% m-o-m. Compared with the same month previous year, they were still up 139%. Rates on the West Africa-to-US Gulf Coast (USGC) route declined 17% to average WS161 points. Compared with the same month previous year, they were 160% higher. Spot freight rates on the USGC-to-Europe route fell 22% compared with the previous month to average WS135 points. Y-o-y, rates were 118% higher.

Aframax

Aframax spot freight rates held up better than the other tanker classes. On average, spot Aframax rates fell 14% m-o-m. Compared with the same month previous year, rates were 167% higher. This was helped by the Indonesia-to-East route, which saw the only increase among the monitored routes. Rates rose 18% to average WS306 points. Y-o-y, rates on the route were up 197%. Spot rates on the Caribbean-to-US East Coast (USEC) route fell 44% m-o-m to average WS263 points. Y-o-y, they dropped 96%.

Cross-Med spot freight rates slipped 3% m-o-m to average WS314 points. They were 199% higher y-o-y. On the Mediterranean-to-Northwest Europe (NWE) route, rates edged down 4% m-o-m to average WS284 points. Compared with the same month previous year, they were around 202% higher.
Nikos Roussanoglou, Hellenic Shipping News Worldwide