Tanker markets remain strong, particularly VLCC

Overall, tanker markets remain strong following the momentum in recent months. The strength was particularly pronounced among VLCC routes, while Suezmax and Aframax markets generally softened slightly.

Suezmax markets were mixed as rates edged higher in the East while falling back on routes West of the Suez Canal. However, owner sentiment in the West is incrementally improving, under the view that rates are bottoming. Aframax markets softened amid a surplus of tonnage, particularly on the cross UK Continent route. Rates further South also softened with a lack of cargoes in the Black Sea and Mediterranean, following multiple weeks of strength in the region.

“Sentiment is suggesting a bottoming of Suezmax and Aframax rates, while questions arise surrounding the sustainability of VLCC momentum”

VLCC markets strengthened again with strong off-market fixing activity. The strength in the market was largely led in the East, namely along the Middle East Gulf to China route. Whole sentiment remains strong after week-on-week gains there are suggestions the market is mostly covered, a sign rates could be topping out.

The situation on the Panama Canal has further deteriorated as the country faces its worst drought in 70 years. According to Splash247.com number of daily transits is to be further reduced to 18 in the coming three months, a figure that will stay until further notice, and these are mostly reserved for container vessels and occasional LNG vessels. The result is a greater number of tankers travelling via the Suez Canal (US–China via Suez – 95 days), or the Cape of Good Hope (US–China via COGH – 103 days), a significant increase in tonne-miles from the US–China via Panama Canal – 75 days. With no end to the situation in sight, a structural increase in tonne-miles is likely to persist.