Aframax Demand in the Spotlight
March 10, 2023
The situation in Europe remains fluid and we continue to expect to see a large rerouting of flows during the course of 2023. For Europe we expect to see increased imports from the Middle East, West Africa, US Gulf, Latin America, as well as regional crude grades. One route in particular we will be keeping a close eye on will be US Gulf to Europe. Europe is likely to be the most significant demand generator for the class for 2023 based on inflows to substitute Russian barrels although it could lose a very large share of export demand. The Aframax segment stands to be one of the main beneficiaries from this development. While the loss of the SPR barrels in the US could slow the export market in the short term, production increases and steady demand from Europe could remedy the situation. These barrels are more likely to flow on Aframax tonnage, resulting in lower Suezmax demand for 2023 (note: after an increase in demand of over 80% in 2022).
Taking a closer look at the Aframax segment, demand is forecasted to increase by 7.33% in 2023, higher than all other DPP classes. Without additional SPR barrel releases, we are likely to see significant (further) growth in flows from the Caribbean to North America as heavy grades from the region place well in the US Gulf Coast refining system. In fact, this trade could enter the top-ten in 2023 in market share. Perhaps paradoxically, the US Gulf to Northern Europe trade demand is likely going to decrease by 1.1% in 2023, as we expect charterers to try and upsize when possible, spreading demand to Suezmax and VLCC tankers as well.
Figure 1 – Aframax Demand – Top 10 Trades
Source: McQuilling Services, IEA, IHS Markit, UN Comtrade
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