Dirty tanker freight rates generally declined in March from the previous month, dropping 3% on average. This fall mainly affected the VLCC and Aframax class in March, while Suezmax closed the month 5% higher than the previous month. VLCC spot freight rates on all reported routes were down in March from a month earlier on the back of lower tonnage demand from Asia with the approach of the refinery maintenance season. Clean tanker spot freight rates showed improved sentiment on all reported routes without exception. Product tankers of different
sizes reported higher freight rates in March on the back of strong tonnage demand, often reporting low availability. On average, clean tanker spot freight rates were up by 16% from the month before.
Preliminary data for March showed that OPEC spot fixtures dropped by 9.6%
compared with the previous month to average 11.79 mb/d. Global spot fixtures
declined as well by 5.8% in March, compared with the previous month, to average
17.04 mb/d. Fixtures on the Middle East-to-East route were down by 17.1% ahead of
refinery maintenance season in the East, while Middle East-to-West routes increased
by a slight 0.01 mb/d, though remaining higher by 10% compared with the same month
one year ago. In general, global chartering activity showed a drop of 12.6% from the
same month one year earlier.
Sailings and arrivals
OPEC sailings, as per preliminary data, reflected a decline of 3.3% in March from a
month earlier to average 23.67 mb/d. However, compared with the same month one
year ago, they were down by 2%. Arrivals in North America and West Asia were lower
by 2.9% and 1.5%, respectively, from the previous month, while European and Far
East port arrivals reported an increase of 0.6% and 2.6% from a month earlier.
Spot freight rates
In March, VLCC freight rates dropped to their lowest level this year so far for tankers
trading on all reported routes, showing a decline from a month earlier. On average,
VLCC freight rates dropped by 14% from the previous month to stand at WS44 points,
continuing the downward trend they have experienced since the beginning of the year.
March fixtures continued to be on the low side for both eastern and western
destinations. The relatively high activity seen in the market only maintained rates flat, a
clear sign of market imbalance. Even continuous delays at Middle Eastern and Chinese
ports had no effect on tonnage supply and freight rates.
Fixtures for tankers operating on the Middle East-to-West route saw softer rates, as
tonnage requirements remained low in general in March, while rates remained
unchanged at best. Freight rates did not pick up at all in April; first-decade-of-the-month
requirements came into play and numbers ended low. VLCC owners tried to hold
freight rates steady to avoid any further slippage, mainly to prevent breaking the WS50-
point mark. Freight rates to the East dropped, despite occasional tight availability.
Thus, Middle East-to-East freight rates dropped by 12%, mainly on the back of low
tonnage demand ahead of refinery maintenance season in the East. West Africa-to-
East freight rates followed the same pattern, dropping by 11% to stand at WS52 points.
Freight rates for tankers operating on the Middle East-to-West route experienced a
higher drop, down by 20% from one month before. Of all reported routes in the dirty
tanker segment, only freight rates on the Middle East-to-West route showed negative
performance over the same month in 2014.
Suezmax spot freight rates were volatile in March. At the beginning of the month, rates
for Suezmax in West Africa were stable since chartering activity was slow, however the
market did encounter later gains as a result of activity in the Caribbean, Black Sea and
Mediterranean. Suezmax freight rates surged in West Africa for end-of-March fixtures
as tonnage supply tightened, while fixing activity increased before rates bounced back;
tonnage supply and demand came into balance. The Suezmax market experienced
positive performance in transatlantic trade due to a stable flow of requirements versus
limited tonnage supply in the region. Freight rates for tankers operating on the West
Africa-to-US Gulf Coast (USGC) route increased by 9% to average WS89 points, the highest amount seen since the beginning of this year, showing a worthy annual
increase of 49%, while Northwest Europe (NWE)-to-USGC freight rates remained
almost unchanged from the previous month to average WS70 points.
Suezmax was the only dirty segment class which closed the month on a positive note,
up by an average of 5% from the previous month and 37% from one year earlier.
Aframax freight rates dropped on average in March by 3% from one month earlier as a
result of mixed performance for the class. Most routes showed a decline, with the
exception of the Caribbean-to-US East Coast (USEC) route, which went up by 4% from
February. Aframax freight rates in the Caribbean remained stable even during times of
low requirement, lack of inquiry and a well-populated tonnage list. Freight rate gains in
the Caribbean were supported by delays and bad weather conditions, which led to
prompt replacements in a tighter market. Aframax freight rates dropped in both
directions of the Mediterranean due to a lack of inquiries and low number of fixtures.
This, combined with a long tonnage list, reduced delays at the Turkish Straits and
shortened transit time, thus adding further vessels to the list. Freight rates for tankers
operating on the Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes
declined by 9% each to average WS116 and WS109 points, respectively. Average spot
freight rates dropped in the Mediterranean, despite premiums being paid for laterunning
Clean spot freight rates
Clean tanker market sentiment was bullish in March on all reported routes due to a
busy product tanker market. In West of Suez, medium-range (MR) tankers enjoyed an
active market and a jump in freight rates. Tankers operating in transatlantic trade
benefited from high tonnage demand, a short positions lists and the refinery strike in
the US. Although MR tanker freight rates experienced a drop at some point, the market
later corrected itself; its activities increased, while vessel availability declined. Thus,
spot freight rates for NWE-to-US routes showed the highest gains, edging up by 32%
over a month earlier to stand at WS168 points, while Mediterranean-to-Mediterranean
and Mediterranean-to-NWE clean spot freight rates increased by 9% each to stand at
WS180 points and WS190 points, respectively, benefiting from the preholiday rush and
a high number of inquiries.
The clean tanker market in East of Suez was eventful, as sufficient activity combined
with an occasionally short tonnage supply was enough to support clean freight rates
across a number of product tanker classes.
On average, clean spot freight rates on East of Suez increased by 17% in March from
the previous month. Clean spot freight rates on Middle East-to-East routes increased
by 19% to average WS128 points, while Singapore-to-East spot freight rates stood at
WS135 points, up by 16% from one month earlier.
Tonnage demand remained strong in the East, with long-range (LR) 1 freight rates
increasing on the back of naphtha shipments combined with tight availability.
MR freight rates remained strong during the month, benefiting from high demand.