This week's chart underscores signs of a slight upward movement in the growth of dirty VLCC tonne days from the Arabian Gulf to the Far East, rebounding from the bottom low seen at the beginning of July. This positive trend is mirrored in WS rates for the MEG-China route, which recorded an uptick this week. While this development is encouraging, it remains to be seen if the supply-demand dynamics will further enhance the recent freight market sentiment. We are actively tracking the correlation between vessel availability
and cargo demand to better anticipate emerging trends, which is reflected in our VLCC insights dashboard.
As July concludes, there are indications of a more robust VLCC freight market. A steady upward trend in the growth of dirty tonne days from the AG to the Far East suggests potential further improvements in the coming days. Although the current levels do not yet match the strong demand growth experienced in the first quarter of the year, positive developments are evident. Notably, the recent decline in vessel counts at AG Ras Tanura is expected to support the recent uptick in freight
rates.
However, the outlook for future crude oil demand remains uncertain. Market expectations are tempered by concerns over China's ability to drive stronger demand growth. As we move towards the end of the summer season, it will be crucial to monitor how Asian energy needs evolve and whether they will bolster demand for cargo and vessel availability.
Crude oil prices appeared set for a third consecutive weekly loss, driven by concerns over weaker-than-expected demand from China. Despite this, oil prices saw some gains earlier in the week, largely due to significant inventory draws reported by the American Petroleum Institute and the Energy Information Administration. Additionally, a boost came from the U.S. Commerce Department’s report of a 2.8% GDP growth for the second quarter, attributed to increased consumer spending and robust business investment.
For more information on this week's freight supply and demand trends, see the analysis sections below. You can also log in to our Newsroom page under Insights & News to stay updated with the latest reports.
As July comes to a close, the dirty freight market sentiment is experiencing downward pressure. However, the VLCC MEG-China route appears to have stalled in its decline, indicating a potential pause in its downward trend.
The VLCC MEG-China freight rates have surged nearly 60 WS, reflecting a 25% increase over the past week and a 16% rise compared to the rates recorded in the same week of July last year.
Suezmax freight rates for shipments from West Africa to continental Europe have fallen below 90 WS, representing a 20% decrease over the past month. Similarly, rates on the Suez Baltic Med route have declined, with WS rates now just below 110, marking a 15% monthly drop.
Aframax Mediterranean freight rates are hovering around WS130, marking a 13% decrease compared to the previous month.
‘Product’ WSLR2 Weaker
LR2 AG freight rates have consistently declined over the past month, currently hovering around WS150, reflecting a 20% drop. However, these rates are still 40% higher compared to the same week a year ago.
LR1 Firmer
Panamax Carib-to-USG rates have increased to WS 280, marking a 50% improvement compared to the same week a month ago.
‘Clean’ MR Mixed
MR1 rates for shipments from the Baltic to the continent have risen to nearly 228 WS, showing a 20% increase compared to levels a year ago. Meanwhile, MR2 rates for shipments from the continent to the USAC have risen to WS 200, representing a 28% increase compared to last year. Conversely, on the USG-Cont route, MR2 rates have fallen to WS 170, reflecting a 30% decrease over the past month.
SECTION 2/ SUPPLY
‘Dirty’ (# vessels) - Mixed
The supply trend for crude tankers presents a mixed picture: VLCC AG and Suezmax Wafr showed signs of a decline, while the number of Aframax vessels in Primorsk and the Baltic is experiencing upward pressure.
VLCC Ras Tanura: The number of ships dropped below 55, nearly 20 vessels fewer than the annual average.
Suezmax Wafr: The current ship count has remained close 65 over the past two weeks, with no indications of an imminent upward trend.
Aframax Med: Over the past two weeks, the number of ships has exceeded the annual average of 13, reflecting an overall upward trend that has been noticeable since the end of week 22.
Aframax Baltic: Since the end of week 26, there has been a noticeable upward trend, with current levels around 30, just 3 below the annual average.
'Clean' LR2 (#vessels) - Increasing
MR (#vessels) - Mixed
Clean LR2 AG Jubail: The upward trend in the number of vessels observed in the previous weeks of July continued steadily, with the count reaching 16, 4 above the annual average.
Clean MR: Vessel activity for MR1 at Algeria's Skikda port dropped to 24, nearly 7 below the annual average, and almost 14 below the peak observed at the end of week 22. In contrast, MR2 activity in Amsterdam has shown an increase over the past three weeks, recently reaching 39, nearly 9 more than the annual average.
SECTION 3/ DEMAND (Tonne Days)
‘Dirty’ Decreasing
Dirty tonne days: The decrease in the growth of VLCC tonne days continued through the end of July, although there are signs of a more favourable growth rate compared to the low point observed at the end of week 24. Despite this improvement, the overall trend remains subdued. In contrast, the Suezmax and Aframax segments are experiencing a pronounced decline during the summer months. The most recent peak for these segments was recorded four weeks ago, and since then, they have been on a sharp downward trajectory.
‘Clean’ Decreasing
Panamax tonne days: In July, the growth pace continued to exhibit an overall downward trend, maintaining the slow growth observed in May and June. For Clean MR tonne days, MR1 vessels have begun to show a slight uptick. However, a weakening trend is still evident across both vessel sizes during the summer months.
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