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Added Jul 1, 2021

Q2 2021: Freight Market Update

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At the end of last year we sought to identify the main trends that will shape the 2021 freight markets. Firstly we urged market participants to follow floating storage as the main balancing factor for freight markets with persistent oversupply carried into the new year. Furthermore, we decided to keep an eye on Chinese imports of crude oil as the main contributor to tanker tonne-miles in this market segment. When it comes to clean petroleum products (CPP) markets, we were hopeful this would be the tanker market bright spot, as refinery outages and closures would spur volumes of oil-on-water, boosting tonne-miles and utilisation. Throughout Q2, activity in freight markets overall remained tepid as market participants geared for an expected pick up in 2H 2021.

Crude tanker utilisation: The good, the bad and the stable

Looking at the big picture using Vortexa freight analytics, the development of utilisation for the main crude tanker segments for the first half of 2021 does not indicate any significant change that could signal a long-anticipated recovery. However, it does display three distinct patterns. 

Starting with VLCCs, utilisation has remained relatively stable, indicating a mere 2% decrease on a quarterly basis. This can be explained by examining the two key routes that propel the VLCC trade: Middle East - Far East and West Africa to Far East. Tonne-days demand for these routes remains flat throughout Q2 2021, but is marginally underperforming when compared to Q1.

The Suezmax tanker class suffered the greatest q-o-q decrease in employment, when compared to its counterparts. The decline is estimated at 5% and commenced at the start of the quarter following tighter supply and demand fundamentals at the end of March. 

Conversely, Aframax tanker utilisation fared the best, displaying an upwards trend since the start of the year. This trend is more distinctive throughout June, on the back of a tighter European market on the vessel supply side.

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