Dirty tanker market sentiment was diverse in May reflecting a variation in average spot freight rates for
different reported routes. Dirty spot freight rates’ movement varied on each reported class. VLCC rates
dropped, Suezmax rates were flat and Aframax rates rose from those registered in the previous month. In
May, VLCC rates declined by 15% as a result of tonnage oversupply in many regions combined with limited
loading requirements. Suexmax spot freight rates managed to maintain rate stability despite general thin
activities. Furthermore a reduction in transit delays added to the vessels’ spot availability and prevented
average rates from registering any gains despite some improved sentiment towards the end of the month.
Aframax, in contrast, showed improved rates in May compared to the previous month, reflecting higher rates
on most routes on the back of port delays, replacements and higher chartering requirements, mainly in the
Caribbean. The clean tanker market showed weakened sentiment in both directions of Suez as a result of
thin tonnage demand for different classes of the market.
Preliminary May data shows that OPEC spot fixtures went up by 6.9%, compared with the previous month,
to average 12.47 mb/d. Global spot fixtures rose as well by 3.6% in May, compared with the previous month,
to average 17.66 mb/d. Fixtures on the Middle East-to-East route were up by 0.6% and on the Middle Eastto-West
routes by 0.4 mb/d. In general, global chartering activity was up by 14.3% in reported destinations
compared to the same month in 2016.
Sailings and arrivals
OPEC sailings rose by 0.36 mb/d, or 1.5%, in May compared to the previous month and were up by
0.12 mb/d compared to last year. Middle East sailings went up from the previous month by 0.25 mb/d and
by 0.15 mb/d in comparison to last year.
According to preliminary data, arrivals at the main importing regions in North American, European and
West Asian ports showed an increase from the previous month, rising by 0.5%, 0.2% and 2.6%, respectively.
While vessel arrivals in the Far Eastern ports declined by 1.8% in May compared to the previous month.
Dirty tanker freight rates
The month started with VLCC freight rates edging down on several trading routes as activities in the market
waned and tonnage list was prolonged. The weak sentiment had the greatest impact on VLCC spot rates,
which despite occasional recoveries saw average spot freight rates in May drop by 15% compared to the
previous month to stand at WS47 points. The VLCC rate decline in May came on the back of limited market
activity as the number of stems was low combined with an increased surplus of ships. Spot freight rates
came under further pressure even when June requirements came onto the market as the tonnage build up
was increasing, therefore Middle East-to-East freight rates dropped by 14%, to stand at WS55 points, which
was a decrease of 12% compared to the same month a year ago. Middle East-to-West freight rates followed
the same pattern, though they experienced a higher drop of 16%, to stand at WS29 points, which is 25%
lower compared to the same month in 2016. Freight rates for tankers operating on the West Africa-to-East
route also dropped by 15% from the previous month. In general, the VLCC market in May suffered from a
clear lack of demand and an oversupply of ships.
Unlike what was seen in the VLCC sector, Suezmax spot freight rates managed to maintain rate stability in
May, despite generally thin activity and a discouraging chartering environment, as the cargo requirements
were scarce, while the tonnage build up kept growing. These facts, combined with a reduction in transit
delays in the Turkish straits, prevented freight rates from increasing during the month. As a result, average
Suezmax spot freight rates stood at WS72 points, similar to the previous month. In West Africa, spot freight
rates for tankers operating on the West Africa-to-US Gulf Coast route dropped by 3% to stand at
WS75 points as activity dropped mainly for third decade loadings allowing charterers to exert further
pressure on rates. Spot freight rates for tankers operating on the Northwest Europe (NWE)-to-US Gulf Coast
(USGC) route went up by 5% to average WS69 points on the back of an occasionally strengthening market
in the USGC and the Caribbean. Despite the monthly drops, Suezmax rates on both routes remained higher
than those registered on the same routes in the previous year.
Aframax fright rates were the only class in the dirty tanker segment, which showed improved rates in May
compared to the previous month. On average, Aframax freight rates increased by 11%, as rates on most
reported routes reflected growth in May. The higher rates for Aframax encouraged Suezmax chartering as an
economic alternative as it suffered from a lack of orders.
The markets in the Black Sea and the Mediterranean strengthened in May as chartering activity picked up,
leading to thinner vessel supply. Furthermore, replacement requirements and delays at the Italian port
supported the gains in the Mediterranean area. Therefore, freight rates for tankers operating on the
Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes edged up by 11% and 15% to average
WS116 and WS113 points, respectively.
In the Caribbean, rates showed the highest growth during May in comparison to other regions. Spot freight
rates went up on the Caribbean-to-US East Coast (USEC) route by 20% from the previous month to stand at WS123 points and higher rates were registered on the back of replacements fixtures combined with a pickup
in activity levels.
In contrast, Aframax freight rates to eastern destinations were the only exception to the general trend in
May, dropping by 4% for tankers trading on the Indonesia-to-East route to average WS97 points.
Clean tanker freight rates
In May, clean tanker market sentiment was generally under pressure. On average, clean spot tanker freight
rates dropped by 15% from the previous month to stand at WS135 points. The drop in West of Suez rates
was the main contributor to average rates as it declined by 21% from the previous month.
Clean tanker spot freight rates showed a significant drop on all western destinations as the market
experienced slow pace with no visible signs of improvement during the month. Spot freight rates for clean
tankers of different sizes edged down in May on the back of a lack of sufficient activity. As a result, spot
freight rates on Mediterranean-to-Mediterranean and Mediterranean-to-NWE routes declined by 22% and
20% to average WS147 points and WS158 points, respectively. Clean spot tanker freight rates for mediumrange
tankers operating on the NWE-to-USEC went down by 25% to average WS132 points.
Similarly, East of Suez average clean spot freight rates also declined in May although to a lesser extent.
On average, spot rates for tankers trading on the Singapore-to-East route showed a slight decline by only
WS1 point from the previous month, to average WS106 points. Tankers operating on the Middle East-to-East
route, showed lower freight rates, down by 7% from the month before.