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This week's data highlights an increasing trend in VLCC available spot relet vessels to load in Ras Tanura in the next 30 days (left chart), coinciding with weakening AG-China freight market rates throughout June. This trend appears to be persisting into July, pushing WS TD3 rates to a new low for this year. In the right chart, data illustrate the weekly arrivals of vessels in the AG for the next 30 days per week, showing an increase from the second week onwards. The weaker outlook of the VLCC dirty segment in the AG is further corroborated by the previous two weekly charts, which depict a decline in VLCC dirty tonne days and the consequent impact on ballast speed.
As the summer season unfolds, a subdued sentiment grips the freight market, particularly evident in the VLCC MEG-China route. The number of vessels at Ras Tanura The first week of July saw a continued weakening in crude oil freight rates, driven by the increasing supply of VLCCs, which exerted significant downward pressure on the market. The increased availability of spot relet vessels in Ras Tanura suggests a potential oversupply in the market, which has contributed to the decline in AG-China freight rates. As more vessels become available, competition among them intensifies, leading to lower rates. This oversupply scenario is likely to persist, keeping the WS TD3 rates suppressed.
The right chart's data on weekly arrivals in the AG for the next 30 days highlights a significant rise in vessel arrivals from the second week onward. This increase in arrivals may further exacerbate the oversupply situation, as more vessels enter the market looking for cargoes. This trend aligns with the observed weakening in the VLCC dirty segment, as illustrated in the previous charts of our weekly market monitor.
The decline in VLCC dirty tonne days indicates a reduced demand for VLCCs in the market, contributing to the downward pressure on freight rates. Additionally, the impact on ballast speeds suggests that vessels are sailing at slower speeds due to the lack of available cargoes, further indicating a weak market outlook.
Overall, the data from the left and right charts, along with the previous weekly charts, paint a comprehensive picture of a struggling VLCC market in the AG. The combination of increasing vessel availability, rising weekly arrivals, declining tonne days, and reduced ballast speeds all point towards a continued weak market environment for VLCCs in the near term.
In terms of oil supply and prices, recent data shows that OPEC+ has extended its production cuts totaling 3.66 million barrels per day (bpd) until 2025. These cuts aim to stabilise the oil market by reducing excess supply and supporting higher oil prices. The decision to extend the cuts reflects OPEC+'s ongoing strategy to manage oil production levels in response to global economic conditions and demand fluctuations. By carefully controlling supply, OPEC+ seeks to mitigate market volatility, maintain a balanced oil market, and ensure economic stability for both producers and consumers. This approach highlights OPEC+'s crucial role in shaping the global oil landscape and underscores the importance of coordinated efforts to sustain market equilibrium.
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Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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