The tanker market remained in depressed levels throughout the month of August. According to the latest monthly report from OPEC, VLCC tanker rates remained at depressed levels in August, weighed down by ample tonnage availability and a lagging increase in tanker demand. Suezmax and Aframax rates managed a better performance in intra-Asian routes, as well as the Atlantic Basin, particularly from West Africa to the US Gulf Coast. Clean tanker rates showed a healthy improvement East of Suez but slipped in the West. The arrival of Hurricane Ida in the Gulf of Mexico at the end of the month resulted in temporary dislocations, temporarily lending some support to dirty Aframax rates, while depressing clean rates in the early days of September as Gulf Coast refineries remain offline.

Spot fixtures Global spot fixtures declined m-o-m in August, falling by 0.8 mb/d, or around 6%, to average 13.9 mb/d. Declines came as activity in Asia was muted and buying slowed in Europe. Compared to the previous year, spot fixtures were lower, falling by just under 2%. It should be noted that rates began the current low phase in June 2020 and have remained relatively flat since; therefore, the August 2020 figures reflect this downturn.

OPEC spot fixtures also declined m-o-m in August, falling by almost 0.6 mb/d, or around 5%, to average 9.85 m/b. Compared with the same month last year, OPEC spot fixtures were about 4% higher, rising by 0.4 mb/d. Fixtures from the Middle East-to-East averaged 6.2 mb/d in August, broadly in line with the previous month, amid steady flows from the region to much of Asia with the exception of China. Y-o-y, the route saw an increase of 0.5 mb/d, or around 9%. Middle East-to-West fixtures declined by 6% m-o-m to average 820 tb/d, amid lower flows to Northwest Europe (NWE) and most of the Mediterranean. This was a decline of around 0.2 mb/d, or almost 23%, compared to the same month last year. Outside the Middle East, fixtures declined 0.5 mb/d, or 15% m-o-m, to average 2.85 mb/d. Y-o-y, fixtures were 4%, or around 0.1 mb/d higher.

Sailings and arrivals
OPEC sailings increased m-o-m in August, gaining almost 1.3 mb/d, or around 6%, to average 22.37 mb/d. Y-o-y, OPEC sailings were 2.2 mb/d, or about 11% higher than the very low levels seen in August 2020. Middle East sailings showed further m-o-m gains in August, rising 0.8 mb/d, or 5%, to average 16.5 mb/d. Y-o-y, sailings from the region rose 1.8 mb/d, or about 13%, compared with the same month last year. Crude arrivals in August were higher m-o-m on all routes. Arrivals in North America averaged 9.1 mb/d, representing a gain of 0.4 mb/d m-o-m, or close to 5%, and a 1.2 mb/d, or around 16% increase y-o-y. Arrivals in the Far East averaged 14.2 mb/d in August, an increase of close to 0.7 mb/d, or 5% m-o-m, and a massive 6.0 mb/d, or over 72%, higher than the same month last year. In West Asia, arrivals maintained the previous month’s momentum, rising 0.7 mb/d, or around 5%, to average 7.17 mb/d. Y-o-y, West Asia arrivals were 2.6 mb/d, or just over 57%, higher. European arrivals remained relatively stable in August at 12.7 mb/d, marginally higher than in the previous month and 2.6 mb/d, or 27%, higher than the same period last year.

Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates slipped lower in August, falling 3%, with marginal weakness exhibited across major routes. Y-o-y, VLCC rates fell 7% due to the stronger performance of West Africa last year. Rates on the Middle East-to-East route were unchanged from the previous month, averaging WS31 points amid stable activity at weak levels as tanker demand remained insufficient to substantially reduce the tonnage imbalance to support rates. Y-o-y, rates were 3% lower. Rates on the Middle East-to-West route declined for the second month in a row, dropping 5% in August to stand at WS21 points amid lower flows to Europe despite steady flows to the United States. Y-o-y, rates were 5% lower. The West Africa-to-East route also declined, down 3% m-o-m in August to average WS33 amid some supply setbacks in the region. Rates were 11% lower compared with August 2020.

Suezmax
Suezmax rates experienced m-o-m gains in August, rising 7%, with gains showing up on most routes. Rates also rose 7% compared to the same month last year. On the West Africa-to-USGC route, rates averaged WS50, representing a gain of 9% compared to the month before, driven by tighter tonnage availability. Y-o-y, rates were 22% higher than in August 2020. Meanwhile, spot freight rates on the USGC-to-Europe route increased 3% m-o-m to average WS38 points, as tonnage availability tightened. This was 7% lower compared with the same month last year.

Aframax
Aframax rates showed gains in August, increasing 6% m-o-m on average as tonnage demand for the class strengthened in Southeast Asia, offsetting declines around the Mediterranean. Y-o-y, rates were 38% higher. The Indonesia-to-East route jumped 23% m-o-m to average WS100, which was 43% higher than in the same month last year. The Caribbean-to-USEC route also saw gains, rising 5% m-o-m to average WS83 in August, and rates were 20% higher y-o-y.

Med routes were either flat or weaker in August. The Cross-Med route averaged WS86 in August, representing a drop of 3% compared with the previous month. Y-o-y, however, rates were 43% higher. On the Mediterranean-to-NWE route, rates were unchanged m-o-m at WS79. Compared with the same month last year, rates on the route were 44% higher.

Clean tanker freight rates
Average clean spot freight rates in August rebounded after three months of losses, increasing 14% m-o-m. the increase was driven by East of Suez rates, which enjoyed strong gains due to rising demand and reduced tonnage availability, with spot rates rising on average 49% m-o-m and 61% y-o-y. In contrast, West of Suez rates declined 2% on average in August, as the tanker market in the region was weak due to ample tonnage supply amid slow demand.

In the East of Suez, the Middle East-to-East route jumped 46% to average WS123, representing a similar 46% increase compared with the same month last year. Meanwhile, freight rates on the Singapore-to-East route increased by 50% in August compared with the previous month to average WS158. Rates were 74% higher compared with August 2020. In the West of Suez market, rates on the NWE-to-USEC route were unchanged m-o-m, averaging WS117 points. However, rates were 21% higher compared with the same month last year. Rates on the Cross-Med and Med-to-NWE routes declined by around 3% each to average WS116 and WS125 points, respectively. Y-o-y, rates were 41% higher on the Cross-Med route and up by 36% on the Medto-NWE route.

The arrival of Hurricane Ida in the Gulf of Mexico at the end of the month resulted in temporary dislocations, depressing clean rates in the early days of September as Gulf Coast refineries have been slow to restart.
Nikos Roussanoglou, Hellenic Shipping News Worldwide