Oil markets were reeling in late July from data showing an 11% fall in total Chinese oil imports in the first half of 2024. Is Chinese transport fuel demand peaking? In June, EV sales were more than 50% of total Chinese new vehicle sales for the first time, while overall new sales were down by over 5%. The fall in sales was almost entirely in internal combustion engine vehicles. Some analysts fear that China will enter a deflationary spiral, forcing oil products prices down and taking refinery throughput with them. That would affect China’s crude oil import demand, which is the key driver of the VLCC freight market. There was some good news for oil traders in the form of rising US GDP and falling inventories in the midst of the driving season. However, refiners are already looking to cut throughput in September as the driving season ends. The US produced 13.3m barrels per day of crude oil in July, the highest on record. The signs all point to oversupply of oil and falling prices. The VLCC market reacted variously. Charterers of ships to load in the Middle East had withheld some cargoes in mid-July, such that TC3C voyages to China cost as little as the equivalent of $21,000 a day by July 15 compared to $26,200 at the start of the month. But rates picked up quickly after July 20 to peak at $36,825 on July 25. Some brokers expect slower activity and longer tonnage lists in the last week of the month, allowing charterers to select ships at lower rates. On the US to China voyage, VLCC daily hire rates were off 5% over the month to date, falling from $35,157 on July 1 to a low of $31,215 on July 23 but recovering to $33,789 on July 25. With three working days to go in July, the Baltic Exchange VLCC average time charter equivalent (TCE) for the month to date is $30,524, which is 12% lower than the June average of $34,552. Chartering brokers and some shipowners will report higher numbers, especially for scrubber-fitted eco ships, but they will have to admit that freight rates are ending July lower than they started the month. Averaged over the last 10 years, July has been a seasonal low point for VLCC earnings which have been just 19% of the annual average whereas this year July’s earnings have been 74% of the year to date monthly average. In sporting terms, there is still plenty to play for in the second half of the year. Suezmax and aframax freight rates also fell in July. The Baltic Exchange global average suezmax daily TCE was $38,568, some 18% lower than the June average of $46,883. The main culprit appears to be demand in Western Europe where refinery capacity is 1.5m barrels per day lower than it was a year ago. Rates on suezmax voyages from West Africa to Europe were 28% lower on July 26 than they were on June 30: $30,506 compared to $42,065. Cross-Med daily TCEs were down 14% over the same period to $32,041. Aframaxes daily TCEs for July to date are 25% down on the June figure, being $38,573 compared to $51,775. The biggest falls have come in the North Sea and on the US-ARA routes. Afras loading in the North Sea for UK discharge were earning a TCE of $33,235 on July 26 compared to $47,739 at the end of June, a drop of 40%. For discharge in Germany, the daily TCE fell 44% from $39,468 to $24,268. This could well be due to a regular summertime lull in activity, though the downswings are significant. We will only know if this is seasonal or structural in Q4. In the Pacific, aframax TCEs fell less, by 15% on average, as tonnage lists lengt