Drastically altered suezmax trading patterns in the spotlight

The massive changes in trading patterns for the world’s suezmax tanker in the wake of the war in Ukraine are becoming clearer.

Summing up the altered trading dynamics eloquently, Norwegian broker Fearnleys noted in its most recent weekly report: “Concentric tonnage flows have become the ‘new normal’ in the Atlantic which should eventually result in the term ‘back-haul’, becoming redundant, at least for the foreseeable future.”

Considerably higher export volumes from the Middle East, West Africa and the US Gulf to Europe have led the way with another broker, Castor Group, noting how most suezmax load and discharge regions around the globe have recorded increases since the middle of June.

The largest expansion was recorded in the Middle East Gulf, a development that has made the region the largest load area for the sector, dethroning the West Africa region as the top exporter.

“The new trade patterns bode well for the sector this fall and beyond,” Castor predicted.

India’s growing volumes of Russian crude imports is also something that is having a noticeable impact on the suezmax sector. Indian imports of Russian crude from the Black Sea have grown seven-fold in the first three months since Russia invaded Ukraine, according to New York-based broker Poten & Partners, and are up ten-fold from the Baltic. These growing imports from Russia benefit aframax and primarily suezmax tankers as the main export ports cannot accommodate VLCCs.

Elsewhere, Braemar ACM recently observed that Brazilian crude flows to Europe hit 532,000 barrels per day in May versus an average of 180,000 barrels per day in 2021. This trade route is predominantly served by suezmaxes.

“While aframaxes and MRs have been the primary beneficiaries of recent shifts in trade patterns, suezmaxes seem to be set to enjoy their own moment in the sun on the back of freshly flourishing freight rates,” a recent market commentary from tanker broker Gibson suggested.

Summing up the shift in global suezmax trading patterns, Niels Rasmussen, chief shipping analyst at BIMCO, said: “Russia will seek to increase volumes to India and China, and they are likely to replace volumes from the Persian Gulf, Brazil, and West Africa. Those volumes will instead move towards Europe. Depending on final trading patterns this could increase average sailing distances and demand for afra- and suezmax ships in particular. This is because they carry most of Russia’s exports as well as a higher share of volumes from the Persian Gulf, Brazil, and West Africa into Europe than into India and China.”

In addition to expanding vessel demand, diminishing vessel supply will be a powerful force in producing a considerably firmer supply demand ratio, Castor has forecast. By the end of the year, almost 10% of the suezmax fleet will be overaged with only a dozen newbuilding deliveries, whereby Castor’s models indicate the suezmax fleet will shrink 4% by year-end.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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