The Year in Review

2024 started with fresh OPEC+ supply cuts and the onset of the EU’s Emissions Trading Scheme, though both of these seemingly impactful stories were quickly swept away by a wave of Houthi attacks on commercial shipping passing through the Red Sea. While these attacks initially targeted only Israeli linked vessels, they quickly became more indiscriminate leading to large scale re-routing from the Suez Canal to the Cape of Good Hope with no end currently in sight, although attacks on merchant vessels have subsided somewhat.

The de facto closure of the Red Sea to commercial shipping was felt most strongly in clean markets, with LR2 rates soaring at the start of the year. Rates remained elevated yet volatile throughout the first half of the year, with tonne mile increases due to rerouting largely reserved for clean markets.

Clean freight rates came down rapidly into the second half as an unprecedented number of Suezmaxes and VLCCs switched to trading clean to profit from stronger CPP rates. All sizes across dirty and clean saw a healthy first half of the year deteriorate moving into Q3, with the traditionally strong Q4 in dirty markets failing to materialize in most sectors. Weak Chinese demand and changing import patterns weighed heavily on rates in the second half of the year, whilst large crude flows from Iran and other sanctioned suppliers competed with cargoes from conventional sources.

After more than a decade of planning, disputes and delays the much-anticipated Transmountain Expansion (TMX) project finally began commercial operations in May, adding on average 375 kbd of exports largely to the US West Coast and long haul to Asia since, a positive development for Aframaxes. Elsewhere in the Americas, the Panama Canal might have been a big story in 2023, but in 2024 water levels slowly increased and restrictions were gradually lifted throughout the first half the year, removing one of the key drivers of inefficiency (and support) for elevated freight rates in the Americas.

On the refining side, the ramp up of the Dangote refinery with a nameplate capacity of 650 kbd was a big story in Atlantic refining markets this year, and though the refinery has had many teething issues, it has started to impact clean tonne miles. The Olmeca refinery in Mexico was also commissioned this year, though product output remains limited for the time being with any impact likely to be more felt towards the latter stages of 2025.

An 240kbd increase in crude exports from Guyana benefitted VLCCs and Suezmaxes. This increase accounted for the majority of Latin America’s growth in crude exports this year with Brazil’s exports declining. Despite production in the US averaging 300kbd higher year on year, exports were flat over the same period, largely due to high refinery utilization rates and strategic stockpiling. On the other hand, whilst this was bearish for crude, it led to the US Gulf being one of the few bright spots in an otherwise lacklustre clean market in the second half of 2024.

On the supply side, a more than two-decade low of just 83 vessels have hit the water so far this year, with a few stragglers likely to slip into the new year. The orderbook, however, expanded rapidly throughout the year, with orders reaching a 9 year high. LNG proved to be the most popular alternative fuel, although most orders were for conventional tonnage.

Secondhand asset prices for the most part continued rising in the first half of the year, though with sentiment and rates shifting in the H2, secondhand transactions and prices eased. Nevertheless, prices are up across the board compared with 2023, except for 15-year-old VLCCs, which decreased by 3%. Suezmaxes staged the biggest increase in secondhand prices, increasing by between 10-20% depending on the age. Newbuild prices similarly saw only one exception to increases across the board, with LR1s flat compared with 2023. Prices for all other vessel classes rose in the first half of the year and softened in the second, though still comparing favorably to last year.

The year ends with freight rates in most markets lower than in 2023. Looking into 2025, many are wondering whether we have seen the peak of the current market cycle, with OPEC+ extending its supply cuts into next year and vessel supply accelerating. However, these bearish factors must be balanced against increasing production in the Atlantic supporting long haul trade, primarily to Asia, where refining runs are expected to grow by 500kbd despite challenged Chinese demand. Further, as laid out in last week’s report, geopolitics are expected to continue to play a major role in tanker markets in the year ahead, whilst the fleet also continues to age. With conflicts in the Middle East and Ukraine, as well as Trump heading for his second presidency, continued volatility is the most likely prospect.

Summary Table – Market & Fleet Data
           
   Dec-23   Dec-24 MTD 2024 
Rates (TCEs at ‘market speed’)WSTCE/day* WSTCE/day* WS LowWS High
VLCCMiddle East – Ningbo59$41,000 42$13,750 3993
SuezmaxWest Africa – UKCont103$44,500 88$29,500 72146
AframaxNorth Sea – UKCont156$62,750 125$30,250 114186
LR2Middle East – Japan159$39,750 114$18,000 94357
LR1Middle East – Japan164$29,000 111$10,750 100379
MRUKCont – USAC190$25,250 132$10,500 84304

  Fleet Size  Fleet Size
  Dec-23  Dec-24
VLCC 903  903
Suez / LR3664  669
Aframax / LR21,143  1,163
Panamax / LR1446  448
Handy / MR2,277  2,301
Tanker Firm Orderbook (25kdwt+)429 / 45.3m dwt 832 / 93.1m dwt
New Deliveries (25kdwt+)104 / 13.9m dwt 83 / 7.3m dwt

  2023  Q4-24
World Oil Supply 102.3  103.4
OPEC crude production 50.65  49.7
Non OPEC 51.6  53.7
World Oil Demand (full year) 101.96  102.81
  End 2023  End 2024
Brent Oil Price 77.04  73.39
  Singapore  Rotterdam
Bunkers VLSFO (end Dec) 549  516

Crude Oil

East

We witnessed an uptick in rates for VLCCs in the AG towards the end of the week as a busy few days of fresh enquiry managed to halt the recent slide. However, it remains to be seen if this is just a temporary lift as charterers look to cover first decade before the markets take a break for the holidays. The fundamentals remain unchanged, and tonnage availability remains high as some owners resisted ballasting west after the recent slump. Rates are not expected to move much next week as activity is likely to be limited. Today we are calling AG/China WS41 and AG/USG WS26.5 via the cape.

The AG Suezmax market has left Owners with very little to get excited about, and a weak VLCC market is keeping sustained pressure on rates for East runs. For Basrah/West today charterers should expect to achieve 140 x WS52.5 via C/C without too much difficulty. For a cargo heading East Charterers will be looking to chip just below 130 x WS90 for an approved unit.

For Aframaxes in Asia, fixing activity for the last decade ensued with private cargoes being worked, but charterers were still able to achieve last done levels. This looks to hold for now as TD14 prints at 80 x W116.5 to close the week. In the AG, a few cargoes were worked under the radar but with Christmas fast approaching any momentum is likely to quickly simmer out with only replacement jobs expected next week.

West Africa

WAF VLCC rates are slowly recovering as a plethora of enquiry for last decade January, especially for eastern runs, finally began to put a dent in the long list of available ships. This upturn might be short-lived as charterers could retreat to their shells after the January programme is completed and people take time off for the holidays. However, with an expected pickup in other areas of the Atlantic current rates should at least hold for now with maybe some further hikes for earlier dates. Off natural dates we estimate that on today’s market a 260 WAF/China run would pay around WS47.5 level.

Suezmax markets in West Africa have seen very little fixed this week and with multiple ships opening up in the region over the weekend we will likely see pressure on rates. For a TD20 run today there is a case to be heard that rates may fall below WS80, especially with the drastic drop off in rates the other side of the Atlantic last night.

Mediterranean

Competition is plentiful for CPC cargoes today on Med Suezmaxes and the last done of WS97.5 looks primed to be broken. Even with around 10 days delays in the Turkish Straits rates are approximately WS90 for TD6. As we get further into winter the option of a Libya/East run is going to start to look more attractive, and charterers will be looking to break the $4.5M level.

At different stages this week changes in market strength and confidence altered noticeably, which were at times quite out of kilter with what would normally occur. This is the reality of shipping in the days before Christmas where information is a little more illiquid than usual. Pockets of strength were seen and on the premise that you had to take an Aframax owners managed to push rates from mid WS140s up to WS155 for Ceyhan runs and even WS175-180 levels for less desirable voyages. Black Sea for natural sized ships also gained momentum after a short dip to WS150 levels and has rebounded at the close to WS165. That said, Suezmaxes did take away some upside from what Afra owners had aspired to achieve, where part cargo employment became an ever more attractive time filler.

US Gulf/Latin America

An increase in activity on VLCC USG exports towards the end of the week was welcomed but has not yet led to any real pick up in freight rates as owner’s sentiment remains weak. Levels for the shorter runs to the UKC are towards yearly lows and the mood is not helped by several ships being released. Brazil exports saw a small increase but activity was muted and not enough to give any impression that an upturn is around the corner.  Today we expect a USG/China cargo to pay in the region of $6.3m and a Brazil/China run is around the WS46.5 level. 

Aframaxes in the USG went for a ride this week after a quick 35 point downward correction followed by a 35 point jump and then crickets.  Most would call the Trans-Atlantic rate about WS165-170 now but with Suezmaxes trading down to 145 x WS67.5, there could be room to push Afras down to WS140.

North Sea

A bit of a pickup in NSea action with a tighter list pushing rates up with owners taking their opportunities. With this typical time of year people are looking to cover without risking having to replace over the festive period and hence it’s worth paying to keep safe ships in hand. We end the week at WS140 with some action expected early on next week.

Crude Tanker Spot Rates (WS)

Clean Products

East

Charterers have played a blinder this week on whipping out ships off market, and the LR2 list is super tight off the front end. Despite this, rates only reacted towards the end of the week, though as we approach the Christmas week expect rates to hold flat from here. TC1 is at 75 x WS110 levels and West at $3.25m. For the LR1s there has also been off market fixing resulting in a thinned out front end. However, looking forward the list is going to be well supplied with ballasters. Rates have held flat all week and even with larger pool owners trying to push the market, last done was still being achieved. TC5 at 55 x WS110 and West at $2.5-2.6m. As much as owners would appreciate a last ditch effort, expect next week to be quiet and rates to hold flat.

A mixed bag of results in terms of fixing and failing on the MRs east of Suez this week where most of the action took place off market. TC17 crept up to WS210 with one or two earlier cargoes getting caught in a tight spot but in a turnaround in trend, questions for east runs have topped the bill. AG/WCI to Singapore has gone from WS160 to WS197.5 on subs as we close the week and sentiment on this run is very much in owner’s favour. Despite expectation of a quieter week next week, there is potential to see further increment with ECI loads attracting Singapore ballasters and the AG remaining steady.

Mediterranean

To the MRs down in the Mediterranean where as we’ve seen a steady flow of tonnage ballasting up from WAF, charterers have been able to clip away their cargoes with relative ease with rates holding mostly sideways. 37 x WS135-140 has been the call for TC2 but with the Handies coming off chunks early in the week, we saw limited demand for any short haul. Moving into next week, we wouldn’t be surprised for an owner to jump on a cargo if it appears, but for now things sit flat. 

All in all, it’s been a busy week for the Handies here in the Mediterranean as many look to get themselves covered before the Christmas holidays. We began the week with XMed trading at 30 x WS200 but with the list replenished from the weekend rates soon took a tumble to as low as 30 x WS155 on Wednesday. This was short-lived, however, as we saw a large influx of cargoes into the market with the becoming very tight on the front-end. Fast-forward to the present day and we see a mixed bag of rates being achieved between 30 x WS170-180 with levels very much date and grade dependent. 

UK Continent 

Unsurprisingly a busy week for MRs has passed as charterers and owners alike look to clear their books before the festivities begin. Initially we saw the covering of the mid 20s window, but now we see a busy end to the week as people look to cover towards the end of the year dates. Rates haven’t really flexed that much considering the activity as it seems both parties have been more focused on cover with TC2 floating around the WS130-135 mark throughout. WAF held a higher premium in the low WS170s and XUKC has been stronger with the aid of a tight handy list. No doubt a few last-minute deals will occur next week with some poor weather around the corner but expect few fresh stems to appear. 

As Handies in the UKC have remained thin on the ground, charterers have had to quote both Handy and MR tonnage for coverage. Rates have remained steady throughout at the level around the 30 x WS180-185 mark with MR owners initially being a little hesitant to commit, not wanting to be opening again during the Christmas period. Expect things to remain sideways till a fresh look at the market can be had in the New Year. 

Clean Tanker Spot Rates (WS)

Dirty Products

Handy

Another active week for the Handy market across both regions as charterers covered cargoes for the festive period. The North saw levels repeat at 30 x WS197.5 as owners and charterers alike looked to get covered with minimal fuss. Looking to the week ahead, bad weather could cause some slipped itineraries and cancelations requiring replacement vessels. After next week, we expect the regular cat and mouse game to continue.

The Med was the more active of the two regions and this worked in the owner’s favour. Consistent and early activity chipped away units from a leaner list causing levels to firm up from WS170 to around the 30 x WS175 mark by week close. One owner managed to secure 30 x WS180 by taking advantage of a tighter EMed but these levels failed to be repeated.

MR

Despite activity in both regions, MR owners saw little by way of full stem opportunities. In the North, a cargo replacement caused little stir as it was tucked away for a reported 45 x WS142.5. Tonnage is thin in the North and once normal market dynamics resume; owners will look to take advantage if given the chance. In the Med, owners have continued to find employment via handy stems which have tightened up availability and we expect owners to kick levels on upon next test. 

Panamax

A quiet week for Panamax owners in Europe as enquiry struggled to surface. Tonnage is thin and laden units from the USG are yet to set sail leaving a handful of ex-drydock vessels in the Med to choose from. In the USG levels softened before holding steady as owners looked to cover before the holidays. Ideas currently sit around the 50 x WS150 mark, and we expect a quiet week ahead.

Dirty Product Tanker Spot Rates (WS)

Rates & Bunkers

Clean and Dirty Tanker Spot Market Developments – Spot WS and $/day TCE (a)

wk on wk changeDec 19thDec 12thLast Month*FFA Q4
TD3C VLCC AG-China WS140405450
TD3C VLCC AG-China TCE $/day25017,00016,75033,00023,500
TD20 Suezmax WAF-UKC WS-682887689
TD20 Suezmax WAF-UKC TCE $/day-4,25028,75033,00024,50028,750
TD25 Aframax USG-UKC WS-4172176111160
TD25 Aframax USG-UKC TCE $/day-1,75043,25045,00020,50035,000
TC1 LR2 AG-Japan WS-410711195 
TC1 LR2 AG-Japan TCE $/day-1,75020,00021,75014,750
TC18 MR USG-Brazil WS26274248196220
TC18 MR USG-Brazil TCE $/day5,00039,50034,50024,50026,000
TC5 LR1 AG-Japan WS0110110106117
TC5 LR1 AG-Japan TCE $/day-50012,75013,25011,00012,500
TC7 MR Singapore-EC Aus WS0160160158167
TC7 MR Singapore-EC Aus TCE $/day-25014,75015,00013,75013,250

(a) based on round voyage economics at ‘market’ speed, eco, non-scrubber basis

Bunker Prices ($/tonne)

wk on wk changeDec 19thDec 12thLast Month*
Rotterdam VLSFO  +11516505519
Fujairah VLSFO  +15542527561
Singapore VLSFO  +14549535575
Rotterdam LSMGO  +12643631666

Print the report