VLCC's Freight Rates Fall 23% on February Because of Chinese New Year Holiday.
The Chinese New Year holidays, refinery maintenance and the decline of crude oil and petroleum products in floating storage, were some of the factors that negatively affected freight rates during February. Additionally, the shortening of delays on the Turkish Straits further increased availability and reduced freight rates. The VLCC sector declined by 23% in February from the previous month for all reported routes. VLCC spot freight rates on all reported routes have been declining since the third week of January as many charters covered their positions prior to the Chinese New Year holidays. However, the last week in February showed an increase of spot freight in VLCC segment as charters rushed to the market to cover March positions. In the East of Suez, VLCC spot freight rates on the long-haul Middle East to East route declined by 23% in February from the previous month. The decline came on the back of slow activity related to the Chinese holidays as well as the effect of the EPSO pipeline activity on tonnage availability. Additionally, the preparation for the upcoming maintenance season negatively influenced tonnage demand, hence VLCC spot freight rates declined. On an annual basis, VLCC spot freight rates on the Middle East to East route experienced an increase of 77%.
VLCC spot freight rates on the long-haul Middle East to West route saw a decline of 16% in February from the previous month. High stock levels, the drop in crude oil in floating storage as well as the upcoming maintenance season, all exerted pressure on spot freight rates. However, compared to the same period last year, VLCC spot freight rates on the Middle East to West route exhibited an increase of 46%.
VLCC spot freight rates from West Africa to the East were also influenced by lower activities in China related to holidays as well as IP Week in London. VLCC spot freight rates from West Africa to East followed a similar trend of others VLCC routes. Spot freight rates from West Africa to East declined by 27% in February compared to previous month.
According to OPEC official data global spot fixtures decreased by 4% in February from the previous month. The decline in global activity was due to various holidays. The decrease in OPEC spot fixtures by 13% supported the decline in global fixtures. Compared to the same period last year, both global and OPEC fixtures indicated a decrease of 5% and 11% respectively.
Middle East to East fixtures ? including OPEC and non-OPEC ? indicated a decrease of 18% in February from the previous month, while fixtures to the West displayed a decrease of 23% in the same period. Preliminary data shows that February OPEC sailings were up by 2% from the previous month. However, on an annual basis, OPEC sailings in February represented just a small increase of 1%.
Estimated data indicates that arrivals in major regions across the globe were mixed in February from the previous month, with arrivals in North America displaying a small gain of 1%. Europe arrivals remained flat compared to the previous month, while arrivals in Asia exhibited a decline of 4% backed by lower activities related to the Chinese New Year.