Tanker - Weekly Market Monitor
Snapshot of Crude and Product Freight Rates, Supply-Demand
Week 02, January 10, 2025
This week’s focus highlights a downward trend in the AG supply of VLCC tankers (both spot/relet and contract), compared to the highs observed in October 2024. For the spot relet market, the performance of Baltic rates has not been fueling expectations for a strong start to this year. The recent growth in dirty tonne days to the Far East appears premature to support the full employment of available vessels. Additionally, the earlier Chinese New Year, combined with the uncertainty surrounding the new era of Trump administration policies from January 20th, could pose challenges for the prosperity of the dirty tanker segment.
Meanwhile, crude oil prices are on track for their third consecutive week of gains, driven by robust demand for heating fuel, which has kept prices elevated. Although the gains for both Brent crude and West Texas Intermediate are modest, they indicate a stronger market than many had anticipated. According to JP Morgan’s market expectations, there is a significant year-over-year increase in global oil demand of 1.6 million barrels per day in the first quarter of 2025, mainly driven by higher demand for heating oil, kerosene, and LPG. This surge in demand could lead to a rebound in freight market momentum later in the first quarter, potentially offering some relief to the struggling tanker market.
Sentiment in the dirty freight market showed weakness at the start of the month, with no signs of improvement yet.
The VLCC MEG-China freight rates have dropped to 47 WS, reflecting a 30% year-over-year decline. Suezmax freight rates for shipments from West Africa to continental Europe have trended downward to 65 WS, a 28% decrease over the past month. On the Suezmax Baltic-Mediterranean route, rates dropped below 80 WS, down 48% compared to the same period last year.
Aframax Mediterranean freight rates have fallen sharply to WS 98. This marks a 30% decrease over the past month and represents a 47% decline compared to the same period last year.
LR2 AG freight rates rose to around WS 130, reflecting a 13% monthly increase compared to the same period last year.
Panamax Carib-to-USG rates have remained stable from the end of the previous year, hovering around WS 145. Recent levels reflect a 40% decrease compared to the same period last year.
MR1 rates for shipments from the Baltic to the continent fell to 145 WS, marking a 20% monthly decline and a 20% drop compared to the same week last year. Meanwhile, MR2 rates for shipments from the continent to the US Atlantic Coast (USAC) have dropped to WS 105, reflecting a 20% monthly decrease. Additionally, MR2 rates on the US Gulf to Continent route remained at similarly weaker levels of WS 100, reflecting a 40% decrease compared to the same period last year.
The supply of crude tankers presents a mixed landscape of signals: a steady pace in the VLCC AG-FE segment, signs of growth in the Suezmax West Africa segment, and emerging optimism in the Aframax Mediterranean segment due to a drop below the annual trend.
VLCC Ras Tanura: The number of ships is now nearly at the annual average of70, marking a decrease of more than 15 compared to the levels recorded at the end of the year.
Suezmax Wafr: The current ship count stands at 75, which is 15 more than the annual average with signs for a persistent increase in the next few days.
Aframax Med: The number of ships continued its downward trend from the end of the previous year, falling further below the annual average to 6.
Aframax Baltic: After a consistent downward trend since the end of week 31, the start of the year has seen a gradual upward shift. However, levels remain below the annual average of 30.
Clean LR2 AG Jubail: The start-of-month trend has fallen significantly below the annual average of 11, dropping to 3. This is a stark contrast to the spikes observed at the end of September and October in the previous year.
Clean MR: At Algeria's Skikda port, the number of vessels has shown an upward movement, rising to 43, almost 10 higher than the annual average. MR2 activity in Amsterdam indicated signs of a dropdown to 40, but still significantly higher than the annual average of 30.
Dirty tonne days: The first month of the year shows a declining growth rate in dirty tonne days, with levels remaining below the annual average across all major vessel size categories. Recent growth estimates suggest a fragile outlook for the freight market, with any potential rebound after the Chinese New Year yet to be seen.
Panamax tonne days: The growth rate exhibited an upward trend in January; however, it remains below the annual average.
MR tonne-days: The growth rate for the MR vessel size segment has been declining since the beginning of the year, defying expectations for stronger growth by year-end. Recent market estimates indicate a drop below the annual average.
Data Source: Signal Ocean Platform