Dirty tanker rates saw mixed movement in May, although they remain at low levels, OPEC said in its latest monthly report for the month of June. The improving US market supported rates on the UK-US route, while very low rates on the Mideast-Asia Pacific route edged up amid anticipation of the end of seasonal maintenance. Meanwhile, clean rates were largely steady, with rates on the UK to US Atlantic Coast boosted earlier in the month, supported by disruptions on the Colonial Pipeline.

There has been a slight improvement in sentiment regarding the outlook for dirty tanker rates in 2H21, although scrapping will need to pick up to better balance ample tonnage supply with slightly improving cargo demand. Spot fixtures Global spot fixtures declined m-o-m in May, falling by 1.3 mb/d, or around 8%, to average 14.7 mb/d. Spot fixtures were around 2.2 mb/d, or 13%, lower than the same month last year. A pickup in departures to China helped support fixtures, although uncertainties due to lockdown measures in other Asian countries undercut further gains.

OPEC spot fixtures edged lower m-o-m in May, down by 0.1 mb/d, or a little over 1%, to average 10.0 mb/d. Higher flows to China were offset by lower volumes to Japan and India amid renewed lockdown measures. Compared with the same month last year, OPEC spot fixtures were around 9% lower, down by 0.9 mb/d. Fixtures from the Middle East-to-East provided the one bright note for the month, averaging 6.2 mb/d in May, representing an increase of 18% m-o-m or 0.9 mb/d. Gains were driven by increased inflows from the region to China, with the winding down of seasonal maintenance. Y-o-y, the route saw a decline of 0.7 mb/d, or just under 10%. Middle East-to-West fixtures declined 29%, or around 0.3 mb/d m-o-m, to average around 0.9 mb/d. The decrease was due to lower buying in the Eastern Mediterranean which offset increased flows to Italy. This was almost 0.2 mb/d, or 18%, lower than in the same month last year. Outside Middle East fixtures fell by more than 0.7 mb/d, or close to 20% m-o-m, to average 3.0 mb/d. Y-o-y, fixtures were down by just over 4%, or around 0.1 mb/d.

Sailings and arrivals
OPEC sailings were broadly unchanged in May from the previous month, averaging 21.4 mb/d. Y-o-y, OPEC sailings were slightly lower, down 0.1 mb/d, or less than 1%. Middle East sailings picked up m-o-m in May to average 15.7 mb/d. This represents a gain of 0.4 mb/d m-o-m or around 3%. Y-o-y, sailings from the region increased 1.3 mb/d, or 9%, compared with the same month last year. With the exception of West Asia, crude arrivals were higher m-o-m on all routes in May. Arrivals in North America averaged 8.5 mb/d, representing a gain of 0.2 mb/d m-o-m, or around 2%, and a 0.7 mb/d, or over 8% increase y-o-y. Arrivals in the Far East averaged 12.6 mb/d, an increase of 0.2 mb/d, or around 1% m-o-m, and a massive 4.3 mb/d, or 53%, higher than the same month last year. Arrivals in West Asia saw the sole m-o-m decline, falling 0.2 mb/d, or close to 3%, to average 6.3 mb/d. Y-o-y, West Asia arrivals were 1.7 mb/d, or 37%, higher.

Dirty tanker freight rates
Very large crude carriers (VLCCs) VLCC spot rates in May were broadly flat on average compared to the previous month, but were some 40% lower compared with the same month last year. Rates on the Middle East-to-East ticked up 3% m-o-m to average WS34 points, supported by flows to China ahead of the end of seasonal maintenance. Gains were tempered by lower flows to India and Japan, amid uncertainties due to renewed lockdown measures. Y-o-y, rates were 43% below the same month last year.

Rates on the Middle East-to-West route was unchanged on average m-o-m in May at WS22 points, amid steady buying by Italy. Y-o-y, rates were 35% lower. Meanwhile, the West Africa-to-East route showed gains of 3% m-o-m in May, averaging WS36, amid higher buying by China. Rates were 38% lower compared with May 2020.

Suezmax
Suezmax rates continued to slide in May, declining 13%. Compared with the same month last year, average Suezmax rates were 42% lower. On the West Africa-to-USGC route, rates averaged WS46, a decline of 13% compared to the month before. Y-o-y, rates were 39% lower than in April 2020. Meanwhile, spot freight rates on the USGC-to-Europe route fell 11% m-o-m to average WS39 points. This was 45% lower compared with the same month last year.

Aframax
Aframax rates recovered some of the decline seen in the previous month, rising 4% m-o-m in May. This was still 22% lower than the same month last year.

The biggest gains were seen on the Caribbean-to-USEC route, which rose 14% m-o-m to average WS103. Y-o-y, rates on the route were 16% lower. Med routes also experienced diverse movements m-o-m in May. The Cross-Med route averaged WS87 in May, representing an increase of 1% over the previous month. Compared to the same month last year, rates were 17% lower. In contrast, the Mediterranean-to-Northwest Europe (NWE) route declined 8% m-o-m in May to average WS78. Compared to the same month last year, rates on the route were 19% lower

Clean tanker freight rates
Clean spot freight rates slipped lower in May, declining 2% with losses East of Suez offsetting lesser gains West of Suez. Rates to the east declined 11% m-o-m, while rates to the west rose 3% over the same period. Compared to the same month last year, East of Suez rates were 52% lower while West of Suez rates were down 13%.

The Middle East-to-East route led losses in May, declining 22% to average WS93. The decline came amid uncertainty due to renewed lockdown measures in Japan. This represented a 63% decrease compared with the same month last year. A similar dynamic drove the m-o-m decline in clean freight rates on the Singaporeto-East route, which slipped 1% in May to average WS146. Rates were 40% lower compared with May 2020. In contrast, the Cross-Med and Med-to-NWE routes saw gains, increasing by 1% each, to average WS149 and WS159 points, respectively. Rates on the NWE-to-USEC route experienced the biggest gains m-o-m, up 7%, to average WS132 points. Rates were 8% lower compared with the same month last year.

Nikos Roussanoglou, Hellenic Shipping News Worldwide