Dirty tanker freight rates generally declined in March from the previous month, dropping 3% on average, said OPEC in its latest monthly report issued this week. 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.

Spot fixtures

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

VLCC

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

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

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-WE 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 late running replacement vessels.