In the final days of February, the VLCC MEG-China route attracted market attention as rates appeared to peak suddenly in mid-February before subsequently retracting to weaker levels. It remains uncertain whether the month’s end will bring about a sustained rebound, given the ongoing decrease in tonne days for the VLCC segment. On the supply side, the latest figures show an unexpected increase for VLCC Ras Tanura, defying expectations of levels below the annual average. The volatility between lows and highs recorded from week to week creates instability, making it challenging for VLCC rates to establish a firmer sentiment. Meanwhile, in the Suezmax segment, there has been a notable strengthening in the evolution of Suezmax dirty tonnes from AG to Med UK, evidenced by a significant spike in rates ($/d).

SECTION 1/ FREIGHT

Market Rates (WS)

‘Dirty’ WS – Weaker​

VLCC – Suezmax – Aframax

The week started with VLCC MEG/China rates holding strong, but as the days progressed, there was a downward revision. Additionally, Suez Wafr-Cont and Aframax Med rates began to weaken in the days leading up to the month’s end.

VLCC MEG-China freight rates surged to 90 WS in mid month, before falling to WS70, marking a 7% weekly decrease. Presently, these rates stand at a similar momentum observed during the same week last year.

Suezmax freight rates for shipments originating from West Africa to continental Europe have dipped below WS100, signalling a weekly decrease of 5%. Concurrently, in the Suez Baltic Med route, rates are recorded at 125 WS, marking a 5-point reduction from the previous week and highlighting a significant 25% annual decline.

Aframax Med freight rates have continued to mirror the trend observed in the preceding days of February, persisting below the WS200 mark. Currently, rates are recorded at 180 WS, representing a 14% decrease compared to levels observed a month ago.

‘Product’ WS

LR2 Weaker

LR2 AG freight rates continued their downward trend throughout the month, dropping to 190 WS, nearly 60 points lower than the levels observed the previous week. This marks a significant decrease of 46% compared to the peak rates recorded at the end of January.

LR1 Firmer

Panamax Carib-to-USG rates have maintained their elevated levels, hovering around 360 WS, showcasing a remarkable 60% increase from the lows observed at the beginning of the year.

‘Clean’

MR Mixed

MR1 rates for the Baltic continent remain stable, standing at around 340 WS, maintaining a consistent outlook over the past six weeks. MR2 rates for shipments from the continent to the US from the continent to the US have shown weakness this week, settling at 225 WS, marking a 15% decrease compared to the previous week’s figures.

For the MR2 route from the US Gulf to the continent, rates stood at 178 WS. This represents a 13% increase compared to the rates recorded a year ago.

SECTION 2/ SUPPLY

‘Dirty’ (#vessels) – Mixed

Amid indications of a decline in the number of vessels for the VLCC Ras Tanura segment, recent days have seen a resurgence, surpassing the annual average once more. In contrast, the Aframax Primorsk and Med Novo segments have shown a consistent trend, not yet exceeding the annual average in vessel numbers.

VLCC Ras Tanura: The ship count rose 65, 5 more than the annual average, nearing the annual average and representing an increase of nearly 15 vessels compared to the low recorded at two weeks ago.

Suezmax Wafr: The current ship count stands at 62, marking a decrease of 7 compared to the previous week. However, this figure still remains significantly lower than the peak observed in week 2, which saw approximately 89 vessels.

Aframax Primorsk: The current number of ships has risen to 28, indicating an increase of 6 compared to the previous week. This surge brings the numbers closer to the annual average, following a period of consistent lows over the last four weeks.

Aframax Med Novo: The number of vessels continues to hover near the annual average of 10 since the beginning of the month, confirming earlier estimations that this trend will likely persist until the end of February.

‘Clean’

LR2 (#vessels) – Increasing

MR (#vessels) – Mixed

Clean LR2 AG Jubail: The downward trend observed in the previous days of February has now been reversed, with levels rising to 7, marking an increase of 5 compared to the previous week. However, this figure still remains below the annual average.
Clean MR: The most recent vessel activity for MR1 Algeria Skikda fell below 30, showing a trend of 7 vessels below the annual average. Meanwhile, in MR2 Amsterdam, the number of vessels has increased to 30, marking a rise of 7 compared to levels from two weeks ago.

SECTION 3/ DEMAND (Tonne Days)

​​‘Dirty’ Mixed

Dirty tonne days: In the final days of February, a persistent decline was observed in VLCC tonne days. Conversely, there appears to be a gradual increase in Aframax tonne days from the lows recorded two weeks ago. However, in the Suezmax segment, the decreasing momentum has persisted compared to the peak observed four weeks ago.

‘Clean’ Mixed

Panamax tonne days: The outlook remains steadfast, reflecting the robust levels observed four weeks ago, which reinforces a sense of sustained firmness in freight rates for February.

Clean MR tonne days: The growth of tonne days in MR1 vessel size persisted at its lowest level observed in the past year, while the growth rate for MR2 vessels has maintained a consistent pace since the start of the year.

Source: By Maria Bertzeletou, Signal Group